Looking for a home loan can be daunting. And with the recent rise in interest rates (and future rises expected), finding a competitively priced loan is more important than ever.
With so many home loan products on the market, first home buyers need take heed when comparing loans and make sure they get the right advice from a lending professional. Do your homework and look for loans with features that will save you money over the long term, rather than looking for a short term fix.
Low introductory rates are one tactic banks and financial institutions use to attract customers. What appears to be a good interest rate in the beginning, can often only apply for a few months. From there on, the interest rate skyrockets and the loan ends up costing you more in the long run than a loan which has a standard rate.
First home buyers should be aware of any additional costs before getting locked into a loan. Flexibility is one of the most important components to look for. A loan that has high exit fees or penalises you for making extra repayments is locking you into the loan – discouraging you from looking for a better deal elsewhere and possibly refinancing.
Likewise, beware of any broker who charges exorbitant fees or recommends loans with a very high interest rate, as they are not likely to have your best interests at heart. A reputable loan adviser will go through a range of loan and repayment scenarios to help you decide which suits your needs best and will then recommend loans accordingly. They should not pressure you to take up a loan which you are obviously not comfortable with.
Making certain you are comfortable with the repayment structure is one of the most important considerations when choosing a loan. Having the ability to make regular repayments is one thing, but you should also make sure that the loan structure allows for further interest rate rises. A loan which doesn’t allow this buffer, may expose you to trouble later down the track if your repayments increase and you are unable to afford them.
Getting the right advice and shopping around early seems to be the key to choosing the right loan and owning your home faster. Whether you are taking out your first loan or refinancing a current loan, advice from a qualified adviser can make a world of difference and could mean you save thousands of dollars over the term of your loan.
For more information on choosing the right loan for you, please visit http://www.elitefinance.com.au/ or call (02) 9868 3900 and make an appointment with one of our qualified financial advisors.