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What is the cheapest home loan ?
Finding the cheapest home loan isn’t as simple as looking at a home loan comparison chart and picking the lender who has the lowest rate. If that was the case, we’d all have our home loans with the same lender and the rest would go out of business. There are many variables in choosing the right loan and sometimes what appears to be the cheapest home loan, is not actually the case.
Cheapest Home Loan - terms, conditions, fees & charges
Firstly you need to be aware of your financial situation and your lending needs. Most of the cheapest home loan products on offer have a very tight lending criteria with strict terms & conditions. These loans may not be suitable for you because you don’t fit the criteria or the terms and conditions don’t fit your needs. Make sure your always aware of the terms, conditions, fees & charges before applying for any loan. A home loan with the lowest interest rate wont save you money if you are paying higher than average fees & charges.The better financial situation you are in, the more options you will have for getting the cheapest home loan. If you have a good deposit, a solid employment history, affordability for the repayments and a good credit history, the chances of getting the cheapest home loan are much higher.
Honeymoon rates
You also need to be aware of honeymoon rates. These are extremely low rates that are offered on a loan for a set period of time. While these rates are great at the beginning, once the honeymoon period ends, you can get stuck with an interest rate that is not competitive with other home loans. You could end up paying much more interest over the life of your loan.
Shopping around to find the cheapest loan that suits your needs
Make sure you look at all your options when shopping around for the cheapest home. As well as the major banks, there are many smaller lenders who can offer lower interest rates and have much more flexible lending criteria. Make sure you keep your options open and consider all the possibilities. If you choose to do the shopping around yourself, ask each of the lenders for the Key Fact Sheets on their loans. These will give you a summary of the fees, repayments, criteria and an outline of the total amount to be paid back over the life of the loan.
Using a Mortgage Broker
If shopping around yourself seems too time consuming or complicated, a qualified mortgage broker can do all the research for you. A good mortgage broker who has a solid relationship with the lenders can sometimes even negotiate a cheaper home loan rate than the lenders advertised rate. Selecting a good mortgage broker is imperative so ask around and see if your friends or family can recommend someone. If you don’t have any recommendations, research local brokers online and see what other people are saying about them. Look at Google reviews (these appear under a company name in a Google search) as these are often the most reliable for unbiased testimonials. If you are working with a specific Broker - Google them to see what testimonials you can find and if there are any people who have had bad experiences with them. Check to make sure the Broker is registered with the Australian Securities Investments Commission ASIC and also see if they are a member of a mortgage association like Mortgage Finance Association of Australia MFAA or Finance Brokers Association of Australia FBAA. The services of any mortgage broker should be free to you as the lenders pay the broker and any advice they give should be obligation free. A broker should also provide you with a range of your best options, not just push you towards using one specific lender.
Don't submit multiple loan applications
Finally, make sure you are certain with the loan and the lender you want to go with before you put in any applications. Each time you apply for a loan, whether it be for a home loan, a credit card or a personal loan, the lender will request a copy of your credit report. This request will be noted on your file and if your report shows multiple enquiries, your credit score will go down because the lender will assume you are having trouble getting a loan. Too many enquiries listed on your credit file can result in your application being declined.An Assured Lending Mortgage Broker can do a loan review over the phone for you in just a few minutes. We will run your lending needs and the basics of your financial situation in our comparison software and let you know what the cheapest home loan options are for you. A home loan review is completely cost and obligation free so give us a call today.
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