Whether you are a first-time buyer looking for a home loan, or looking to refinance your existing mortgage, you’ll find it easier to discover the best home loan products for your circumstances by shopping around and comparing multiple products.
Shopping around for the lowest interest rate on home loans using comparison websites is a great way to begin; consider the various home loan products from banks, credit unions and building societies, such as variable and fixed rate home loans or split and package loans.
Variable home loans are the most popular type of loan in Australia, but that doesn’t necessarily mean they are the best mortgage product for you. With this type of loan, your lender determines the rate of interest you will pay – if the lender increases rates, your repayments will also rise. Likewise, if rates fall, so too do your repayments.
If you’re looking for financial peace of mind, then perhaps a fixed rate loan is the best mortgage product for you. Fixed mortgages will typically have a set rate of interest for an agreed period of between one and five years (or more), and the rate never changes. This is ideal for those who think they may struggle with repayments should variable interest rates climb. The disadvantage with fixed rate home loans is they generally lack the flexibility of a variable home loan.
A split loan is one of the best mortgage products for those who can’t decide on a variable or fixed rate mortgage. These home loans are part fixed and part variable and it doesn’t matter which way interest rates move, you’ll win a bit and lose a bit either way.
For those looking to secure the best mortgage products that also incorporate other financial products, consider the ‘package’ loan option. By bundling together a variety of financial products such as a home loan, transaction account and credit card with a single institution, you could save significantly overall. Often lenders will offer a significant discount off the standard variable rate, with an overall annual fee that covers several products (the savings and fees will depend on the lender).