When you are choosing a home loan, you need to read between the lines and observe even the minute details. Even a small change of   ½%, can make a big change in your pocket by way of monthly commitment. There are a number of loans available and each loan has its own repayment period, interest rate and each loan charge their own variable fees. Apart from this you have to prove your credit worthiness and commit to repaying the loan over a period of years. When you buy a home you suddenly face huge expenses, land rates, water rates, mortgage repayments, house and contents insurance, house repairs etc. You need to work out all these costs and then work out a loan plan.

When choosing a home loan, you need to fulfil certain eligibility criteria. You need to show proof of income, savings and the initial deposit you are going to make for the house. Documents needed for the loan will depend on the loan you are taking.

There are many places you can take a loan from like financial houses, credit unions, banks etc.

The next step is to analyse what the loan is for. If you are going to reside in the property you need a home loan, but if the house is for investment purposes you need to take a residential investment loan.

Next decide how long you need the loan for. That will help you in choosing a home loan wisely. If you try and pay more than the minimum monthly requirement you can save on interest, but if your income drops by some chance you may land in trouble, hence choose a loan where you can pay more than the minimum when you can and where the interest and the repayment years will reduce simultaneously.

The biggest dilemma in choosing a home loan arises when you have to decide between choosing a fixed rate or a variable rate. The variable interest rate loan is subject to market forces and when the rate goes up your mortgage repayment rises too and the converse happens when the rates go down. You can reduce your interest payments however if you keep up the repayment amount. In a fixed interest the rate does not change during the fixed period. So when the rates rise you are happy and when it falls you have to pay the higher rate.

Combination loans of fixed and variable rates are also offered. You have to take into account the exit fee, mortgage discharge fee, late payment fine, redraw fee etc, when choosing a home loan.