Top home loans
With lots of lenders out there advertising their loans, it should be easy to find the best ones, shouldn’t it? In fact, there are several different things you’ll need to consider when trying to do so, and the top loans for somebody in your circumstances might not be the same as the top loans for somebody else. You’ll need to decide what type of loan is right for you and then work out which offers the best combination of low rates, low fees and useful features, giving you the deal you want.
Types of loan
As well as basic loans, there are several specialist types of loan on the market that might be better suited to your situation.
- Low doc home loans – these loans are more flexible about documentation so they’re easier to get if your circumstances are unusual or you work as a freelancer.
- Package home loans – these loans come in a bundle with other financial services such as bank accounts or credit cards, and can work out cheaper.
- Bad credit home loans – believe it or not, it is possible to buy a home even if you have bad credit, using one of these specialist arrangements.
- Loyalty discount home loans – some loans offer discounts and perks to borrowers who stick with the original provider instead of switching.
- Loans for professionals – if you are a doctor, lawyer or similarly respected professional, you may be able to get a good value specialist loan.
Identifying the best loans
Once you settle on the type of loan you want, you’ll need to compare those offered by different providers. Use the comparison rate for an at-a-glance summation of rates and fees, and ask for the Key Facts sheet to help you weigh up the value of any additional features.
Variable rate loans generally offer cheaper rates than fixed rate loans, but they’re not as secure for the borrower, so they’re not the right choice for everybody. Bear in mind that if you agree to a long loan term in exchange for low rates, you could end up paying more overall even though your monthly payments will be lower.
There are many different types of fee attached to home loans, including a number of different start-up fees and monthly or annual fees. You will need to factor these in before you can get a clear picture of the real value of the loan.
Often lenders try to attract borrowers by adding lots of special features, but smart borrowers only take on those they will actually use. This could be anything from a credit card to a facility for making early repayments free of charge.
When you’ve found a top home loan you like the look of, you’ll still have to see if you qualify for it. Ensure you have enough money for the deposit required and check that the terms and conditions are right for you. If you qualify easily, don’t just settle – haggle. In this situation it’s likely that several lenders would love to have your custom, so you’re in a strong bargaining position and may be able to secure an even better deal.