Making sure to choose the right home loan for your needs is very important, whether you’re buying your first home, or your seventh investment property. When shopping around for the perfect variable loan, there are plenty of things to consider which help get you a competitive loan that can help you reach your goals of owning a home. Here are a few things to look for:
Competitive rates & low fees
It’s important to look at the loan package in its entirety to make sure you’re getting the best possible rate, as many people look only at the introductory interest rate rather than the ongoing rate. Your finance broker should be able to provide you with a fact sheet which explains the loan’s interest rates and fees in full, as well as how much you’ll repay for every dollar so you know so there aren’t any surprises in the future.
Ability to choose your schedule of repayment
One of the easiest ways to reduce the length and overall interest paid on your loan is to make repayments more frequently. Having the ability to choose your schedule of repayment allows you to pay off your loan faster, so try and find a lender that gives you to option to make weekly or fortnightly repayments at no extra cost.
Additional repayments with a redraw facility
Keep an eye out for a variable loan that has a redraw facility that allows you to make extra monthly payments as well as your regular home loan payments, as this can help to reduce the amount you pay on your mortgage overall in addition to having the ability to redraw the funds as required. While simple extra payments of $50-$100 a month may not be a lot to you at the time, it can have a significant impact on the total cost and length of your home loan over time.
Access to an offset account
Look for a variable loan with access to offset account to help you save on interest payments while simultaneously reducing the length of your loan. If a loan offers a 100% offset account, you are able to earn the same amount of interest as you pay on your mortgage, which makes for an excellent savings strategy!