How to fit your home loan around your lifestyle
Unless you're lucky enough to be living in a cave in the remote Albanian mountains, you will be only too aware that housing affordability and home loans are a hot topic right now. Consumers are being faced with an increasingly complicated market of home lending products when they decide to take the plunge and embark upon home ownership. Do you fix your rate or leave it variable? If you decide to fix the interest, for how long should you fix? Should you split your loan to hedge your bets on interest? Do you want a loan that comes as a part of a package? Should you have an offset account attached to your loan?
With so much choice it's easy to overlook some loans that may actually suit you very well. One type of loan that is increasing in profile is the Revolving Line of Credit Loan. Their popularity is based on the added features and the potential it gives consumers to pay off their loan sooner.
The loan offers a credit facility from which you can withdraw funds at any time up to the set limit. Provided the minimum monthly repayments are met, the credit is available to use as you wish and the limit is usually higher than the limit available on a credit card. This facility can be especially useful for home owners wanting to renovate their home or for those who wish to consolidate household debt at a lower interest rate than is readily available on a credit card or personal loan.
Some loans, including revolving line of credit loans, offer consumers the option of an offset account. By directing all of your income into this offset account and then only withdrawing those funds you need each week you have the potential to minimise the interest you pay on the loan because all your extra funds "offset" the principle of you loan which is accruing interest. Be warned however; you need to maintain a healthy balance in your offset account to ensure that the interest you are saving on your loan amount is greater than or equal to the extra cost you pay to have this feature.
Although there are some great features available on a line of credit loan, they will not suit everyone. To save money and pay off your loan sooner requires great self-discipline. If you do sometimes spend your money without accounting for it; creating a weekly budget for yourself that lists everything you need to buy and the amount you will spend on it as well as the extra funds you intend to put towards the loan can help you keep a closer eye on your spending. If you still don't think you have the necessary discipline required perhaps this is not the choice for you.
Do some research online about different types of loans available and what they can offer. If you think a line of credit is the way to go; the following table lists a small selection of the CANNEX 5 star rated products available on RateCity.
| CANNEX 5 star rated products | |||
|---|---|---|---|
| Company | Product | Published Rate % | Star Rating |
| ANZ Bank | Equity Manager | 8.32% |  |
| Commonwealth Bank | CBA Portfolio Loan | 7.96% | |
| Credit Union Australia | Mortgage Freedom >$250k | 7.84% | |
| Select Credit Union | Super Equity Access | 7.44% | |
| State Custodians | Breathe Easy Home Loan | 7.69% | |
| Source: www.cannex.com.au 12/10/2007 | |||
How do I compare mortgages?
RateCity is the best website to shop around on for over 2000 home loans and most other financial products. At RateCity, you can use expert comparative data from CANNEX, Australia's leading financial research and ratings firm. CANNEX has analysed and evaluated hundreds of products to award five stars to only the very best. The CANNEX star ratings go much further than just looking at interest rates. They also take into account important features so you can be confident you are getting the best product.
Use our easy search tools to compare home loans at RateCity.
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