Choosing the best home loan when rates are low
Full House Finances
Interest Rates, Home Loan, Mortgage Broker
Purchasing a home is an exciting and terrifying experience. And, just because interest rates are at an all-time low, it doesn’t mean it will be any less terrifying negotiating the fine print of many lenders. In fact, there can be some extra tricks to keep in mind in this market.
Low interest rates are great news for mortgage holders. But they’re not necessarily great news for the economy. This means banks and lenders could be on edge and using swear words like ‘downturn’ and ‘r-r-r-recession’… At times like this, don’t be lulled into a false sense of security by a low rate and forget to do your due diligence.
Here are a few tips for new home loan hunters, beyond the interest rate…
1. First up, use a broker if you can. They’ll do all the legwork for you, and can assess your individual needs now and into the future.
2. Know your standard variable from your fixed rates, and why each is better suited to certain people than others. (Or consider when it might be a good idea when to hedge your bets and go for a bit of both.)
3. Objectively look at your financial position before looking for a new loan, by asking yourself these important questions:
- Have I saved enough of a deposit to establish the loan and cover all of the
upfront costs and fees?
- Is my current financial situation likely to change? Will this affect my
ability to pay off the loan?
- Do I have adequate income protection to cover my mortgage repayments
if I am affected by illness or injury?
4. Check the loan provides good flexibility. Too many new borrowers forget to factor in the terms and conditions of a potential mortgage in their rush to lock in a low interest rate. Importantly, you want to make sure you won’t be penalised for paying off the principal faster by making extra payments. And it also pays to have a fee-free redraw facility so you can access funds in an emergency, thus making your home loan work harder for you over the life of the loan.
Remember, taking out a loan is a big decision and a whole new world of responsibility. Ideally, have a mortgage broker look over the loan and explain the fine print to you before signing.
** For an obligation-free health check and assessment of your individual borrowing needs, call Full House Finances on 9664 4115.
First Home Buyers
, Home Loan
, Interest Rates
, Mortgage Broker
, Property Loans