Mortgages are one of the biggest financial commitment that people will take on in their life. Ensuing you have the most suitable mortgage for your financial situation is very important. When sourcing a mortgage you should consider the type of interest rate as well as the most competitive, fees and charges that you will be required to pay and the overall features and flexibility of the loan. Having the right home loan can help you to save thousands of dollars and knock off years of your loan.
In Australia there are more than 30 home loan lenders so it is important to understand each lender and their product offerings to determine if it is the right product for you. Before you begin your search for the home loan it is important to determine the features of the loan you require to help narrow down the products that best suit your situation out of the hundreds that are on offer.
Somebody who has the ability to save a lot may want a loan with an offset account to help reduce the interest they pay, an investor may want an interest only loan and a family on a strict budget may want a fixed rate loan to keep their repayments the same each month and not fluctuate with rate changes. Once you have determined what you want out of a loan you can begin your search.
The internet can be a great tool when searching for a new home loan. Information provided by the lenders is updated daily to reflect changes in the market and can give an overview of what each lender provides and their products without having to go in to a bank branch to find out the information. The information sourced can then be compared with other lenders that are offering products that suit your needs.
When comparing home loan products you should consider-
- The interest rate – is it variable, fixed or an introductory rate that will revert to a higher rate after a set period of time
- Annual and monthly fees – What are the ongoing fees and can these be avoided
- Package Fees – Is the home loan product part of a package that includes a credit card and transaction account and do you really need these
- Application and other upfront costs – What other fees and charges will you have to pay up front to take out the loan
- Discharging Fees – The cost to refinance or payout the loan
- Maximum LVR – What is the most I can borrow against my property and is it enough
It is important that when comparing home loan products you take into consideration all the fees and charges that are involved and not just the cheapest interest rates. Sometimes loans will offer a cheap interest rate but will have ongoing fees and charges that in the long run you will end up paying more. You should also read the fine print of each loan product and if you have any questions about anything about the loan you should ring the lender directly to get clarity.
You can help to narrow your choices by talking to family or friends about their experiences with certain banks. You can also take into consideration the other services the lender offers that could benefit yourself.
Once you have decided on which home loan product you would like to apply for that bests suits your needs it is important to speak to the lender to ensure you meet their lending criteria. Applying to too many lenders can negatively affect your credit scores and lenders may not want to lend to you. You can also apply to VEDA to get a free copy of your credit report to ensure it is all clear before you apply for a new loan.
Doing as much research as you can whilst comparing mortgages is very important. Spending a few hours doing this can result in thousands of dollars saved in interest. Also determining what features you require in a loan so you are not paying extra fees and a higher rate for features you do not use or need. Once you have sourced your loan, applied and settled it is also important to stay up to date on what is happening in the market and ensure that every couple of years to ensure your home loan is still best on the market. You may find that in a couple of years time that there are new products on the market and if you may be able to refinance to a better rate and save even more on interest.