Home loan interest rates get a lot of attention and it is for a good reason because they determine the total cost of your home loan and your monthly repayments. Remember even a small change in interest rates can make a big difference to your repayments and even strain you financially.
Though the Reserve Bank of Australia has retained a cash rate of 2 percent since May 2015, the big four have reprised their interest rates over time causing many Aussies to switch from variable interest loans and opting to fix their mortgage rates in fear of rates going up with time.
“A lot of mortgage holders are now acutely aware that Australia’s banks can and will lift their variable rates as they see fit. As such, it isn’t surprising to see an increasing number of Australians opting for the security of a fixed rate home loan,” said John Flavell the Chief Executive Officer of Mortgage Choice during a recent data release.
Here Are Some Helpful Tips For Finding The Right Home Loan.
1. Should I get fixed or go for
a variable rate?
Mortgages usually come in two forms; fixed or variable interest rates. With a fixed rate mortgage, your interest rate is locked in for an agreed period of time usually one to five years where your repayments remain the same throughout this period. The variable mortgage rates fluctuate over time depending on the RBA’s cash rate and sometimes the bank’s decisions. Fixing your home loan rate is a very good way of managing your risk so when you do look at your budget if you feel things may be tight then do absolutely consider a fixed rate.
2. How much should I expect to pay in fees?
When applying for a home loan,there may be an application fee and once your loan has been approved you may be charged other costs such as valuation costs, legal and settlement fees. One important thing to remember about these fees is that they are not set in stone and you can always try to negotiate for lower rates. If you are unable to negotiate on your own, home loan comparisons websites like Mortgage Choices,The Finance Site etc can find a home loan negotiator who will negotiate with the lenders on your behalf at no cost. The right person will be able to help you compare loans and figure out which loans have fees and which ones don’t -and importantly if a lower fee loan really is better value or is the interestr ate so high you are worse off.
3. Flexible features
Most borrowers assume that the best way to save on paying a large amount of interest is through finding a great rate. However, taking out a home loan that allows you to make additional payment could help slash that amount even further. Some other features you may want to look out for as you search for the perfect home loan search include repayment flexibility (the ability to set up your repayments monthly, fortnightly or even weekly), a redraw facility and an offset account.