What Makes a Great Home Loan?
Choice can be a good thing; you just have to choose from the variety of options available. On the flip side, the more options available can make it harder to pick. It’s the same when selecting the right mortgage. How do you decide on the perfect one to suit your situation and financial goals? After all, a home loan is a long-term financial commitment and not one to be taken lightly.
But finding the right type of home loan for your individual needs can be simpler than you think when you know what to look out for. We cover the top ingredients of the ideal loan to give you a head start.
A competitive low-interest rate
The first thing anyone looks for in a home loan is a low-interest rate. It will determine what your repayments will be over the term of your loan and how much you’ll have left over for living expenses. As one of Australia’s most awarded lenders, we offer one of the lowest interest rates on the market, so we’re a good place to start.
Always check the comparison rate as well. Don’t skip this important step because the comparison rate gives you an idea of the overall cost of your loan as compared to other loans. It’s a legal requirement that the comparison rate is displayed right next to the applicable interest rate, so it’s easy to find.
The largest deposit you can save
While you could find a loan with a smaller deposit, aiming for at least a 20% deposit gives you an advantage. If you’re a first home buyer, there are ways to supplement your savings, including the First Home Owners Grant and even financial help from family members.
With a 20% deposit or more, you can avoid paying Lenders Mortgage Insurance (LMI), a premium that gets added to your loan to protect the lender in case you have trouble servicing the loan.
Having a more substantial deposit means you’re a lower risk to the lender and you may even be able to negotiate better terms and a lower rate.
Choose the right loan set up that works for your needs
Many people prefer to go with a variable rate loan to make the most of the low-interest rates, and if they drop even lower, then that would also reduce your loan repayments. But rates could also go up, making fixed-rate loans popular too, to lock in the certainty of guaranteed low rates for a set period. Of course, if you prefer the best of both worlds, choosing a split loan might be the way to go. Splitting your loan into part variable and part fixed lets you maximise the benefits of both scenarios.
Minimal fees and maximum features
Always check the fees and charges payable because they can quickly add up and increase the overall cost of your loan. Are you paying ongoing monthly fees for loan features you don’t need? Are there fees for using loan redraw facility or penalties for making extra payments? You’re unlikely to find a home loan without fees, but you can ensure that you’re fully aware of all the fees and charges applicable to your loan.
You get what you pay for, and while you can get a basic no frills home loan, the best home loans will have features like a 100% offset account and redraw facility to help you pay off your loan sooner and save you interest.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for information about the best options for you when it comes to your mortgage.