If your first home loan has been approved, you’re probably relieved, excited and ready to get moving. However, approval is only the first hurdle. The way you structure the loan can affect your repayments, flexibility and how you manage the debt over time.

Here are a few things to think about.

Your home loan structure matters

Having your loan application approved is a big step, but it’s only the first one. Next, you’ll need to think about what sort of home loan structure is right for you. A SHARE mortgage adviser can help you understand and consider the options available to you.

Choosing a fixed term

You’ll need to decide on a term to fix your home loan for. It’s common for people to fix for a year or two, although some like the certainty of a longer term, while others prefer the flexibility of a short fix.

Not everyone fixes their home loan in one piece. Some borrowers choose to divide their loan into smaller portions and fix each portion for a different term. This approach can offer a mix of certainty and flexibility. As each portion comes up for refixing, borrowers have an opportunity to review their circumstances, adjust their repayments, make a lump-sum payment, or consider whether a different fixed term might better suit their needs.

What about an offset or revolving credit facility?

Some borrowers choose an offset or revolving credit facility. With an offset loan, money held in linked accounts is deducted from the home loan balance when interest is calculated. This can reduce the interest charged while keeping the money accessible.

A revolving credit facility works more like a large overdraft secured against the property. Income can be paid into the account to reduce the balance on which interest is calculated, and funds can generally be redrawn up to the approved limit. These facilities are usually on a floating rate and require careful budgeting, so they will not suit everyone.

A SHARE mortgage adviser can help you consider whether either option may be appropriate for your needs and circumstances.

Emergency funds matter

Home ownership can come with unexpected expenses, whether it’s a plumbing emergency that means you have to pay an after-hours fee, or damage that requires you to cover an insurance excess. On top of those unpredictable bills, there are the ones you know are coming, such as rates and insurance, which you may have set up on a monthly payment schedule.

It can be very helpful to have an emergency fund available so that you don’t have to resort to expensive borrowing to get through. Some people keep emergency savings in an offset-linked account, so the money remains accessible while also helping to reduce mortgage interest. Others prefer a separate savings account.

We’re here to help

Your SHARE adviser isn’t just here to help you get your loan application approved. We can help you set up your loan in a way that will allow you to make the most of your home ownership and set you on the path to your wider financial goals.

If you’d like to talk about your mortgage structure or any other aspect of your home loan, get in touch with the SHARE team. We’re here to help.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.