This is an email question from Tom in Karrinyup: I want to finance a new car with my home loan, can I get a home loan to finance my new car with a 5 year loan term?

 

This is a question I receive frequently, what term can you take a mortgage out for. We will look at Brian’s question first. Brian has enough equity to be able to borrow the extra money to purchase his car with his mortgage. His current bank allows a home loan term of 5 years, so yes we could finance his car with a 5 year home loan term. In Brian’s case, we set up a separate home loan, with a term for 5 years. It was for him, a cheaper option than a car or personal loan, as the interest rate and associated fees were cheaper with his mortgage.

 

Most bank and lenders will have different policies with regards to loan terms. Some bank or lenders may not have a minimum loan term, some will. It differs between banks and lenders, so if you are not sure ask your mortgage broker or bank. A shorter home loan term may be handy if you are thinking about using your mortgage to purchase a car, pool or something else, as it commits you to paying that debt down quicker, thus saving you interest.

 

Most bank or lenders have a maximum home loan term of 30 years, although some banks or lenders may consider a 40 year loan term. Generally, the average loan term these days is 30 years, but if you wish, you can reduce the loan term to whatever you would like, provided the bank or lender will allow it.

With most banks variable rate home loans will also allow you to pay off as much extra on your home loan with no penalties. Most banks will also allow access to the extra funds that you have paid too, with online home loan redraw.

If you would like some more information, please contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.