Understanding Your Loan Contract

Having a broker and a solicitor do the heavy lifting for you is probably one of the smartest ways to acquire a property. The reason for this is that they have the knowledge and the network to help facilitate the process for you. However, it would also be a good idea for you to review your contract even when you're working with professionals. That way, you can be sure that you get everything that you requested prior to signing it.

You don't have to know every detail in the contract, as some are fairly standard. However, you still need to take a closer look at the specific details, such as:

  1. The specifics of your payments. Your contract will indicate the amount that you want to borrow, the interest rate, how much you will pay, and how often you will make those payments (usually monthly, fortnightly or weekly). The term of the contract can also be found there, which often ranges from 25-30 years.
  2. The fees involved. This is where you should pay close attention to when reviewing a contract. Some might include charges that weren't previously mentioned, so it's best to be aware of them. Meanwhile, other fees can be quite burdensome that they aren't worth the initial savings you make. These include administration fees, fees when have your loan restructured, and charges when you use redraw methods.

After You Review Your Contract

If you're happy with the details of the contract, you need to sign and send it to the solicitor of the lender. You have 21 days from the time you receive the offer to do this. You can use your own solicitor to facilitate the process for you.

However, if there are details that you wish to change, talk to your lender about it. From there, you could draw up a new contract with details that you will agree on. If you cannot convince the lender to change the details of the contract, you might have to consider looking for a better deal somewhere else. Keep in mind though that the process of getting financing from another lender would take some time again.

Here at Rate Detective, our professional advisors could help you find the right deal for you. They will provide you with a rate comparison of Australia's top lenders, so you can pick a deal that fits your needs and your budget.

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Published on November 11-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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