Finding the perfect home loan is no easy feat but a search worth investing in. Knowing what rates and features make a good home loan will help steer you down the right path.
What makes a good home loan
A great way to help you get on top of your finances is to understand what makes a good home loan. With the loan repayment calculator, you are able to compare not only the interest rates from various lenders, but also the bells and whistles that each loan has to offer such as redraw facilities and the flexibility to make additional repayments. Ensure that you also check the ‘comparison’ rate before committing to a loan.
With a redraw facility, for instance, if you pay more into your home loan than the minimum monthly requirement, you can access (draw back) some of the surplus loan repayments you have made. Be aware though there may be fees and minimum redraw amounts associated with this facility – and these vary from loan to loan.
Fees and comparison rate
As well as providing you with avenues to help you save, the loan repayment calculator also provides a comprehensive list of fees associated with each loan. The best way of determining the impact of fees on a home loan is by checking the comparison rate.
The comparison rate takes into account all additional fees and charges such as any upfront or monthly ongoing costs. Some loans, based on the interest rate alone, can appear to be quite cheap, but when fees are factored in, may actually prove quite expensive. The comparison rate, which factors in these fees, gives a truer picture of what a loan will cost you. The comparison rate also reveals the true, long term cost of loans that have cheap, introductory ‘honeymoon’ rates.
Getting it right from the beginning is so important when comparing home loans and that’s why a loan repayment calculator is such a useful tool.