RateCity
The Right Home Loan
For many finding the right home loan can be hard, especially for first home buyers.
One reason for this is because many first home buyers are persuaded by banks, brokers or family and friends on what the best way is and the best deal but it may not necessarily be the right choice for them.
As a first home buyer it is important to find the right home loan as it could mean lower repayments and saving yourself thousands over the term of the loan.
Below are some errors that some first home buyers might commonly make and how you can avoid them.
- Introductory rate home loans. Most intro home loans offer lower interest rates, known as a honeymoon rate, usually for the first year. However at the end of this period the rate usually reverts to a much high rate for the remainder of the loan. For instance, one of the lowest intro rate loans on RateCity in October 2010 has an advertised rate of 5.94 percent for the first 12 months however the rate reverts to a variable rate of 6.94 percent for the remainder of the term. If you were to compare this with the lowest variable rate loan on RateCity at 6.29 percent, at the end of a 25 year loan for a $300,000 mortgage you could save yourself $32,933 with the lower rate loan. Take a look at the table below for some variable rate home loans to work out how much your repayments will be.
- Features. Depending on what type of home loan you require and your circumstances will depend on what type of features you will need. Some loans come with a range of features that you may not use and that you could be paying extra for. Alternatively there could be features that you don???t have access to but need, so shop around and look for a home loan that offers the features that you will use.
- Redraw facility
- Lump sum repayments
- Mortgage offset
- Mortgage portability
- Additional repayments
- Split option
