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

Mortgage comparisons top tips on how to get the best deal

07 Apr, 2011 - 2 min read

Mortgage comparisons top tips on how to get the best deal

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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Disclaimer

This article is over two years old, last updated on April 7, 2011. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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Laine Gordon

Head of Public Relations

Laine Gordon is the Head of Public Relations at RateCity and an experienced journalist and research specialist. With a background in news and feature writing, covering finance, media and even food (a passion of hers) at Reed Elsevier publications, Laine brings almost two decades of experience to the team. Having covered major areas of interest to the general public from hip pocket issues to rising and falling interest rates and the impact to mortgages, credit and saving in Australia, she is passionate about researching and telling people’s stories to help others make better decisions about their own finances.