Are you planning to build an investment property, a new home or your first home? If yes, you are at the right place. Home building can be exciting and fun if you choose the right home loan or mortgage. It has become harder to choose a suitable home loan as the industry becomes more and more complex and competitive. You should compare home loan rates as home loans come in various variations. Currently, there are variable, fixed and introductory rates being offered by many lenders with principal & interest or interest-only repayment methods. Thus, it is prudent to be armed with the right knowledge regarding what suits your circumstances and the home loan repayment features.
Home loan rates
All home building loans are not equal because their features and fees differ. To get a general idea of the lending market, you have to compare home loan rates even if some loans have the same or almost the same interest rate. Why is it advisable to compare loan rates? Because there could be dissimilarities in the fees and points making one offer cheaper than the other. To accurately compare the loan offers, it is crucial that you understand the components that are used to determine the price of your home loan like your credit score.
What are the benefits of comparing home loan rates?
The main advantage involves your ability to recognize the true or real cost of your loan. A comparison rate includes charges, fees and interest rates relating to a particular home loan as a single percentage figure. Although the lender may advertise a low-interest rate, it doesn’t mean that the comparison rate that represents the true loan is low and vice versa. Remember that a lender with a lower comparison rate but higher advertised rate may turn to be cheaper over the long term. One drawback concerning comparison rates is the fact that they are being polished. What does that mean? The lender may not include variable fees in the calculation of a comparison rate and plan to add them later. To avoid that scenario, you have to understand the exact structure of your home loan and then compare that information with what you know.
Although your best friend or parents have a particular type of home loan option, for example, an adjustable-rate loan or a 20-year fixed-rate loan, it doesn’t mean that it is the ideal home loan for you. Some people may prefer the adjustable-rate loan lower initial payments while others the predictability of the fixed-rate loan. As each person has his or her unique financial situation, it is equally important to know the type of the loan that caters to your needs.
Home loan broker
If you are not knowledgeable on the subject of home loans, and you are not sure that you can get the best deal, you may want to hire a broker. In Australia, there are hundreds if not thousands of loan brokers across the whole country. Most of these home loan brokers have a lot of experience and knowledge about lenders and various loan types. The most important thing they can help you get it right is your loan structure and the loan range suitable to your structure.