Mortgage comparisons: top tips on how to get the best deal



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April 7, 2011

There are countless mortgage comparison facilities available, but what do you really need to know when you’re looking for a home loan? Here are some essential criteria to help you choose the best mortgage.
Remember, when determining your repayments, give yourself a buffer – can you still comfortably meet your repayments if interest rates go up by 2 percent?

Types of loans

  • Introductory or honeymoon: Usually offers lower, fixed interest for the first year and then reverts to current standard variable rate.
  • Standard variable-rate: Allows you to borrow the money for a set period of time, during which you make regular repayments. Ask your lender for a discount on the variable interest rate. Usually you can expect up to a 0.7% discount if you borrow a large amount of at least $250,000 or more if you borrow $500,000 plus.
  • Basic variable-rate : Offers a lower interest rate than standard variable-rate loans, but has fewer features and may not allow extra loan repayments.
  • Fixed-rate: The interest rate is fixed usually for between one and five years – great if interest rates go up, but costly if they go down.
  • Split or combination: For example: with a $250,000 home loan you could have $100,000 on a variable rate, $50,000 on a two-year fixed rate and $100,000 on a five-year fixed rate.
  • Transactional mortgage: This is the most flexible home loan as your mortgage is run like a bank account allowing you to make repayments but also to withdraw money. However, you will need to be disciplined, stick to a schedule of payments to reduce your loan and not over spend because you have easy access to cash.
  • Online loans: Often have low interest rates, redraw facilities and the option to split your home loan between variable and fixed rates.

 

 

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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