Low rate home loans
Everybody wants a loan with a low interest rate but finding one that meets your needs isn't always easy. It always involves making compromises so you will need to think carefully about which type is appropriate for you. The best low rate home loan for your circumstances may be different from the best one for somebody else. Finding the right one, however, can make your life much easier.
It’s natural to compare the products you see offered by the interest rate they advertise when you’re looking for a low rate loan. This can be misleading because sometimes loans that are promoted as having low interest rates have high annual fees that mean you would end up paying more overall. The best thing to do is to use the comparison rate, which takes most fees into account as well, and is designed to make it easier for you to see the best deal at a glance.
Lenders that offer low rate home loans usually do so by cutting back on extra features like credit cards and free early repayments. To get the best low rate loan for your circumstances, you’ll need to think carefully about which extra features are really important to you. A lot of borrowers get by without any at all.
Fixed rate loans
Fixed rate loans often have slightly higher basic rates but can be a better choice for people on a tight budget because outgoings remain predictable and there will be no sudden rises. Having this security can make it easier to use other money in your possession, rather than having to keep a float in case of a sudden rate rise. Often borrowers look to lock in a fixed rate with the official RBA cash rate is low.
Variable rate loans
Variable rate loans usually offer the lowest interest rates on the market but entail more risk, so they can be a great way to save money, but they’re not always the best choice for people on low incomes. If the national interest rate is high and is expected to fall it can be a good time to take out a variable rate loan because you will then see your rates fall and will be able to take advantage of the changing situation.
Is the interest rate offered as good as it looks or are there hidden charges?
Is it really worth your while to pay for additional features?
Is it worth getting a lower rate now if it means you may have to pay more later?
How much risk can you afford to take in order to take advantage of market variability?
Can you afford to pay more overall by accepting a longer loan term to keep your monthly payments low?