How to compare home loans and features
The home loan you choose can have a substantial impact on the future of your life, whether you are a first home buyer in Sydney or making your first move into the housing market, buying an investment property, or renovating your home.
There is no such thing as a one-size fits all home loan because everyone’s home loan needs are unique. The best home loan with right features is easier to get if you know what you’re looking for, so it’s important to first understand how you’d like to structure the loan. Finding the best home loan rate comes down to comparing loans. There are a lot of mortgage options available on the market, so it’s a good idea to compare home loans and find the one that’s right for you. You may have different ideas about what you consider a good home loan than others, and your opinion may change with time.
A good home loan generally includes :
- Competitive interest rate (makes it easier to repay the loan a lot sooner)
- Low establishment costs and fees
- Features that apply to your needs and genuinely meaningful for you
We’ve put together a list of questions to ask yourself before you compare home loans in order to help you find a home loan that suits your needs.
- Would you like a variable, fixed, or split interest?
It’s crucial to compare different home loan interest rate types in order to customize a loan to suit your needs.
- Fixed interest – Home loans that offer fixed-rate terms provide a degree of security if you want to budget ahead or work with a strict budget.
- Variable interest – The interest rate of a variable home loan varies based on market interest rates and lender price policies, which may suit those who can be flexible with their repayments.
- Split interest – Split interest means that a part of your mortgage loan is secured by a fixed rate, while another part is secured by a variable rate. This makes borrowing more secure and takes advantage of interest rate cuts.
Calculate your repayments under different variable and fixed rates and variable rates using this handy Split Loan Calculator.
- Which features will you actually need? While a loan that comes with lots of extra features sounds great, it is generally true that the more features come with the loan, the higher the costs involved with it. You may opt for a no-frills loan, however, if you choose one that offers more (such as a redraw facility) you want to ensure you are using what you pay for.
- What will the fees be? In addition to application fees, valuation fees, lender’s mortgage insurance, monthly fees and annual fees, you may also have to pay break costs if you want out of the mortgage.
- What is the comparison rate? A comparison rate indicates the true cost of a home loan, based on the fees, charges and interest rate. This implies each rate has equal priority when comparing with other loans.
- Are you planning to stay or move?
If you plan to move, build or renovate, checkout the following features to ease the transition:
- Bridging loan – With bridging finance, you can buy a new home before selling your existing one.
- Loans for building – If you want to build a home from scratch, your requirements will differ from a standard home loan because you won’t need to get a loan for the whole amount at once. Building loans are generally divided into progress payments to cover the initial stages of construction through to completion.
- Loans for renovating – A renovation can be funded in a number of ways. If your home has equity, you may be able to refinance your existing loan. As an alternative, you might investigate a construction loan which allows for borrowing funds as progress is made.
- Shorten your loan term as much as possible.
Your loan term is the length of time the loan has to be repaid through. It affects how much interest you’ll pay and the size of your instalments.
A shorter loan term results in higher payments but a lower interest rate. The longer the loan term, the lower the repayments, however, the more you will pay in interest fees.
2. Using a mortgage broker
You may choose to hire a mortgage broker in Sydney to find loan options for you with many lenders to choose from in Sydney. You can compare loans from multiple banks with the assistance of an independent mortgage broker in Sydney. This broker doesn’t typically charge you anything. They get paid commissions by the bank when you get your home loan.
Freshwater Financial services offers a range of competitive home loans that are suitable for your financing and refinancing needs
There are many online home loan comparison services that can help you compare loan products. Freshwater Financial Services suggests obtaining a ‘key facts’ sheet for each lender you are considering before digging deeper into the terms and conditions. You will find detailed information that will enable you to make an informed decision, including the total amount to be repaid over the life of the loan, repayment amounts, and fees and charges.
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