What else to look out for when choosing a home loan
Although the interest rate is important, it is just one component of a home loan. There are other important factors you should consider, which can contribute to the cost and your budgeting plans in both the short and long term. Here are some of the key things you’ll need to consider:
FIXED VS VARIABLE HOME LOANS
Choosing between a fixed rate and a variable rate depends on several factors, including your expectation of interest rate movements, your income and ability to absorb changes to your mortgage repayments, and your appetite for uncertainty. You can also consider splitting your home loan between fixed and floating rates to suit your specific needs. If you are still unsure about which option to choose, our experienced Mortgage Advisers can help assess your financial situation and structure your home loan in a way that suits your individual needs!
LOAN TERMS
Usually, the longer your term is, the lower your monthly repayments will be. However, you will likely pay more in interest over the life of your loan. A longer-term mortgage might be better for someone who has a more limited budget or wants to save cash for other expenses. A shorter-term mortgage might make more sense if you can afford higher repayments and want to pay off your loan faster. There’s also an option to refinance to shorten or extend your loan term if your financial situation changes down the road.
CHARGES & FEES
The interest rate alone doesn’t take into account other costs, like establishment fees, ongoing fees, and fixed rate break costs. These fees and charges can vary considerably from lender to lender and will affect the overall cost of borrowing. When comparing your home loan options, make sure you understand the features and costs of each home loan.