There are so many home loans on the market these days with an increasing variety of rates, fees and features that it really pays to shop around.
The main challenge is to look beyond interest rates and include all the costs with the loan, also the features that a home loan offers.
Often there is a trade off between interest rate and flexibility. Make sure the loan suits your circumstances and the way you want to pay it off.
Borrowers in the market for a competitive home loan need to educate themselves about the different home loans which are available on the market. The easiest way to do this is have Access One produce a Mortgage Comparison Report for you.
Borrowers need to decide which loan features they need. Fixed or variable rate. Home loans which offer redraw facilities are popular as they allow borrowers to repay more than the minimum regular mortgage repayments and withdraw surplus repayments. Some lenders offer free redraw facilities, others charge.
If you have surplus disposable income, then a line of credit loan or 100 per cent offset account might be the ticket.
Once you’ve determined the type of loan that best suits your needs, it’s time to go mortgage shopping.
It’s important to decide whether you want a mortgage with fancy features or whether you want a basic loan at the cheapest price. The answer will depend on your circumstances and preferences.
A flexible loan, which includes most standard variable loans, typically offer features such as allowing you to repay your loan early without penalty or repay extra when you feel like it.
Flexible loans will also allow you to make weekly or fortnightly repayments rather than monthly payments, Some basic accounts don’t allow this.
Flexible loans, which are priced above basic variable loans, can also offer valuable features such as offset or lines of credit facilities.
If you do get a basic variable loan, make sure you have some repayment options which allow you to cut your interest bill.
Shop around for a basic loan with as many features as possible. Remember, it’s not just interest rate, but what you can do with your home loan that is important.
A fixed rate loan is best for people who like the security of knowing their repayments.
A variable rate loan is best for people who like to keep their interest costs to the very minimum and who are happy to gamble on the future direction of interest rates.
Introductory or Honeymoon Loans so called because the bliss doesn’t last, honeymoon loans offer borrowers a discounted rate of interest for a brief introductory period. After this period (typically 12 months) the loan usually reverts to the standard variable rate.
The disadvantage is when the honeymoon is over, your repayments rise steeply. What’s more, honeymoon products often come with hefty exit penalties if you try to pay out the loan early.
This type of loan revolves around credit secured against a residential property, allowing access to funds when needed.
These products are creative ways to raise funds for investment by providing cash up to a pre-arranged limit.
The advantages is you use the money you need and pay it back when you can, Interest rates tend to be lower than credit cards or personal loans. The disadvantages are if you are not a good budgeter it can reduce the equity in your residential property.
A low-doc or no-doc loan is ideally suited for investors or self-employed borrowers looking to refinance, purchase or renovate.
No tax returns or financial reports are required.
Advantages: Simple income declaration form no tax return no financial records fully serviceable loan options, redraws, line of credit, variable or fixed rates, P&I or interest only loans.
Cons: Generally a higher interest rate
Access One can assist you by making sure that your mortgage application is complete, and presents your case for finance in the best possible light.
We are also aware of the different serviceability requirements for each lender, and can direct you towards lenders who will be more sympathetic to your present financial situation, especially if your first application is not approved.
Before an application is forwarded to a lender, it is reviewed by an Access One Loans Manager in order to identify and correct any missing or incomplete information, thereby ensuring the greatest chance of approval.
Access One has designed a detailed report called The Mortgage Comparison Report the report takes the confusion and hours of phone calls to different lenders researching the best rates features and fees.
The report combines the effects of all fees and charges, their interest rate and any other payment options and combines it into a single effective rate which can be used to compare loans accurately.
