Home loans: Plan for the worst, hope for the best

Securing a home loan can be a bittersweet experience. On the one hand, you are getting the keys to a property you can call your very own. On the other, you are committing to a long term financial agreement that comes with a lot of responsibility.

Fear not, it is possible to stay focused on all that is grand about owning your own home and not having to worry too much about things going wrong.

The trick is to develop a plan at the outset of your mortgage, one that will encompass all that is required of you for the life of your home loan.

Stage 1 – The acquisition period

This is probably the most important stage when it comes to protecting yourself heading into a large financial commitment.

Before you sign on the dotted line, you should know exactly what you are buying and the agreement you are getting into.

For this reason, you should organise a chat with a mortgage broker who can explain to you the meticulous details, purchase fees and future payments associated with your loan.

Reading the fine print could save you stress and aggravation later on, while home loan insurance can give you peace of mind.

Stage 2 – The repayment period

After the initial purchase of your home and long after, you will likely be making monthly repayments to pay off the balance of your loan.

In order to accomplish this effectively, it is recommended that you set up a realistic budget that you can follow to keep everything ticking along smoothly.

This should include enough savings to handle periods of unemployment. Although you may be working full time now, you cannot know what the future brings.

Stage 3 – The reassessment period

If incomes or personal situations do change, it is important to remember that you can reassess your mortgage to suit your current situation.

Keeping in regular contact with your mortgage broker can help you decide if you need to refinance or rethink your saving strategy.

In any of these stages, it is easy to see how home loan insurance can provide peace of mind for all of those ‘just in case’ scenarios.