Big four banks price war
Some consumers choose a loan based on the interest rate alone. This can be a costly mistake. For example one of the major bank’s is proudly advertising that they have cut their variable rates, which seems like a good deal on the surface, however they still have one of the highest interest rates on the market.
You’re not necessarily better off by going for the lender with the cheapest rate. Even if two loan products seem very similar, they may in fact be very different. It’s important to not just look at the interest rate as the deciding factor between various loan options – differences in the small print can mean thousands of dollars difference between two loan products. Not only that, we have recently seen some lenders increase rates well above the Reserve Bank of Australia’s move in the official cash rate. The cheapest rate today may not the cheapest in even six months time, let alone over the life of your loan.
Your longer-term plans can also affect which home loan product you choose. Selling a property in short-period of time, accessing equity for further purchases or having an offset account to reduce interest costs may be planned in your near future, however if you have the wrong loan product refinancing these could prove costly or even worse delay your time-frames in executing those plans.
At the end of the day you will have to make a decision on what you consider is the best loan for you. If you are able to obtain some of the features that are important to you then the fact that the interest rates is a little higher shouldn’t scare you off. A good finance broker will be able to steer you through all the alternative options which don’t just include the major four lenders.They will also help you find the most suitable loan that will work for you now and in the future.
Finance Broking Services are provided by Momentum Wealth Finance Pty Ltd.
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