Homeowners and those searching for their first home know the importance of a great mortgage rate. A down payment, interest rates, and a mortgage duration are all key factors in any decision when buying a home, but what most of us forget is that the process of applying for and securing a great mortgage loan starts years before the home search begins.

Whether you have questions over mixed-use insurance options, property tax burdens, or repayment schedules on a fixed-rate mortgage and opportunities for refinancing in the future, borrowers are always looking for the best deal possible.

With the average age of Australians buying for the first time rising above 35, there is ample opportunity for us to become competent borrowers and homeowners that can take advantage of many of these opportunities. With these extra years between joining the workforce, putting in for a home loan, buoying additional savings, and credit building opportunities, there should be no reason why you can’t plan for and take advantage of a great home loan option.

But there remains a lot of homework to be done in the planning phase of the home buying cycle for a tenant-turned-borrower.

Start Early



The best-equipped home buyers are those who have been planning for this major expense for a year or longer. The best-prepared home buyers use a mortgage calculator to understand their earnings versus expenses during this transition period.

A mortgage calculator can help you identify a price range that won’t break the bank and give you a firm target to save for as you prepare the funds for a down payment ahead of the ongoing monthly payments that will be required going forward during the loan term. It might be helpful to also think about this like a deposit on a rental home and the ongoing monthly charge for rent to your landlord. However, the down payment is many times greater and the monthly mortgage payment obligation is typically somewhat smaller than you may be used to.

With the help of a mortgage calculator, you can create a savings plan that works with your budget. Putting away cash every month into the stock market or a simple fixed or easy access savings account is the best way to reach your goal as quickly as possible. You may need to save for a year or two, or even longer to put together the necessary funds. But with these firm numbers in your back pocket, you can take the guesswork out of the borrowing process and come to the table with the down payment figure that you will require already prepared.

Consider overpaying your monthly payment to reduce the principal faster.



A great credit score and savings plan in the years ahead of a home purchase will help reduce the interest rate you will expect to pay on your home loan. However, there remains one powerful tool in your arsenal that can be deployed once you move into the home. Overpaying your monthly obligation, even by a hundred dollars every month, will reduce the principal of your loan directly.

Alternatively, you could send extra payments one month per year in order to achieve the same end. By paying more than you have to, especially for those who find their monthly obligation reduced from the outgoing rent payments they were used to, you can quickly tear away at the large debt that you face as a new home buyer. Mortgage payments are often entirely manageable for new homeowners who have been planning for the expense for a long time but by overpaying, especially early in the number of years of the loan’s life, you can save yourself tens of thousands of dollars over the long run.

Getting the best rate on your home loan is all about creating and executing a plan. Make sure you start early and stick to it for the best results.