The Wrong Home Loan Can Cost You Thousands!
- Find A Better Rate Home Loans
- Aug 24, 2016
- 2 min read
The wrong home loan can cost you thousands in additional interest charges and fees over the life of the loan, so don't take the first one you see! We are going to explain how to pick the right home loan for you.
Firstly, minimise the interest rate. Even a small discount to the interest rate can add up to big savings, so it makes sense to shop around and negotiate with lenders to ascertain the best interest rate possible even if its the "advertised rate". Consolidating other asset such as savings and insurances with the lender can also assist is minimising your interest rate because you are becoming a bigger customer.
Secondly, understanding variable vs fixed rate loans and the pros and cons for each option. Variable rates generally offer a cheaper headline rate, but have the added risk of becoming more expensive if interest rates rise. Fixed rates on the other hand provide certainty around repayment amounts over a period of time, but are generally less flexible. It is possible to fix a portion of your loan and leave the rest at a variable rate. This provides the best of both worlds. This provides the security of fixing, but you still benefit if rates go down or if you're in a position to make additional repayments on the variable part of the loan.
Next is offset accounts. An offset account is a transaction account that's linked to your home loan. Money in the account offsets the outstanding balance of your loan, which reduces the amount of interest you have to pay. This is an option that is not provided with every loan, so check with your mortgage broker to see if this product is available.
Minimising your fees is another way of saving money. Fees that can be included are establishment fees, ongoing administration charges and break fees for fixed rate mortgages.
Once you have settled on your loan, the conversation, with your lender shouldn't stop there. Banks make an absolute fortune over the life of your loan, so don't be afraid to push your lender for an additional discount and keep an eye out for deals that could benefit you.
Having a mortgage broker who has years of experience dealing with lenders and knows all the fees and charges and has a relationship with the banks can make a big difference in negotiating the best possible interest rate for you.
Find A Better Rate Home Loans have experienced Mortgage Brokers ready to assist you with finding the best home loan to suit your circumstances. Contact Us Today.
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