Australia is a notoriously indebted nation, in terms of personal debt. The land down under ranks fourth on the list of the world’s most indebted countries, expressed in terms of average household debt as a percentage of after-tax dollars brought in each year.
With so much debt, it’s virtually impossible – if not literally impossible – for most consumers to buy a house with cash or a bank transfer. The vast majority of all home purchases are made possible through financial institutions’ offers to mortgage out home loans in Australia.
Statistics from the Australian Bureau of Statistics also indicate the widespread popularity of home loans in Australia; 56.3 percent of all household debt belongs to – you guessed it – home loans in Australia
Further, the same organization found that 36.5 percent of all personal debt was directly tied to investments, ranging from traditional financial instruments to rental properties and leased commercial buildings facilitated through Home Loans Calculator Loans.com.au.
Without further ado, let’s explain the basics of home loans in Australia, one of the best places to live on planet Earth – expect for it huge spiders.
What Is A Home Loan?
The purpose of borrowing money, as you likely already know, is to purchase something now for X dollars, typically agreeing with lenders to pay back X + $, where $ is additional money lenders are paid that serves as an incentive to lend.
Home loans in Australia are usually extended over the lives of 25 or 30 years, their balances paid towards either every two weeks or every month.
The world of extending home loans in Australia is huge, to say the least. Because they often involve hundreds of thousands of dollars, they must adhere to strict rules and guidelines set forth by various agencies of Australia’s government.
How much does a home loan in Australia really cost?
What’s the answer to this question? It isn’t simple or cut and dry, that’s for sure. However, we should cover the most significant factors weighing into the cost of all home loans in Australia.
The principal is the amount of money borrowed for a Home Loans by Loans.com.au. If your home costs $150,000 and you pay for it entirely through a mortgage, the principal totals to $150,000.
Interest is a percentage value that adds on a fraction of the outstanding balance every fortnight or two weeks.
Together, principal and interest make up the equation that was referenced at the beginning – X + $ – where principal is X and interest is $. $ also includes fees and other charges.