Applying for a home loan this year? Here are 6 things to consider first

If you're thinking about taking out your next home loan this year, make sure you review these things before you start applying.

If you're thinking about purchasing a new home this year, or considering adding to your property portfolio, it's important to weigh up your borrowing options carefully.

The lending landscape has undergone a number of shifts in recent years. There are different factors at play that may influence the sort of loan you're looking for.

So before applying for your next home loan, there are some points to consider first.

1. Interest rates

For more than 12 months, interest rates have been a hot-button topic among home owners and prospective buyers alike.

With numerous rises in the cash rate since May 2022, home loan interest rates have also seen an increase.

This has made the discussion around fixed or variable rates more complex.

Fixed rates have tended to drift slightly higher than in previous years, though there's also the potential that a variable rate could climb higher still.

This is where tools like Bankwest's home loan calculator can be helpful.

You're able to determine how much you're able to repay, across a range of different interest rates.

For buyers looking at buying a new home or expanding their portfolio, this can be a great way to determine your best methods for managing expenses.

2. The cost of living

In addition to increases in the cash rate, the cost of living has also been increasing over the last couple of years.

So for any new loan you're considering, it's important to check whether it has features that will help support you.

If cost of living challenges arise during its lifespan, you want to be sure that you're working with a lender that will work in conjunction with your circumstances.

Features like flexible repayments, redraw capabilities and lender support can all be very handy in combating cost of living rises for shorter periods.

Tools like the mortgage calculator can also give you an idea of what sort of capacity you have to meet mortgage repayments under a range of different conditions – while still avoiding mortgage stress.

3. Access to lender support

Lender support is crucial throughout the lifespan of your loan. When important questions come up, you want them to be answered ASAP.

You also want to know you'll be able to get assistance if hardship occurs during the course of the loan.

So it's important to look for a lender with a positive reputation for customer service.

For example, Bankwest has a Mobile Lending Manager service for new lending enquiries.

When you're looking at applying for a loan, you can have a lending expert come to you – even outside of working hours.

This is particularly handy if you work a traditional 9-5 role, and can't necessarily make it into a branch during regular business hours.

Bankwest offers 24/7 phone support and consultation in its branches around the country. Support is also available via the Bankwest app or website.

4. Redraw capabilities

One of the common concerns people have when buying a home is tying up a huge chunk of money for several years, at a minimum.

Given the increase in interest rates, the cost of living and wider property prices, it's an understandable concern. Budgeting effectively helps – but financial emergencies can still pop up.

This is where having redraw capabilities on your home loan can be helpful.

You're able to access funds from extra repayments that have already been paid into the loan as necessary, without needing to apply for a separate loan or going through a refinancing process.

Bankwest home loans allow borrowers to make extra repayments without penalty, too. Although this will obviously reduce the lifespan of the loan, it can also be a way to ensure that extra funds are available in the event that you require a redraw.

5. Access to offset accounts

Offset accounts are a feature that can be handy for borrowers. They enable you to reduce the interest paid on a home loan via keeping money in a specific account that sits adjacent to the principal of the home loan.

Bankwest home loans allow you to have multiple offset accounts. So you're able to utilise the benefits of an offset account to keep your interest down, while also being able to distribute your money into different buckets as required.

You might choose to set up one to handle day-to-day expenses, another for bills, or even one for savings. This way, you can see at a glance where your current finances are sitting.

6. Your current savings goals

The best way to use your savings can present some challenges when you're buying your dream home or investment properties.

Funneling funds into the mortgage to pay it down more quickly can seem like the most logical choice.

But this can clash with other financial goals – a new car, education for the kids, family holidays or renovations on the existing property, just to name a few.

Offset accounts can be an effective means of funneling your funds for saving. However, everyone's needs are different, so it's always worth discussing your specific circumstances with a lending specialist before applying for your next home loan.

Explore Bankwest's home loans today