A mortgage may be the biggest financial commitment you will ever make, which is why choosing the right home loan is critical.
As well as looking at interest rates, home buyers should evaluate loan features, benefits and extras to find those that best suit their current financial position, lifestyle and home ownership goals, as well as any rewards that may be included.
Cheaper isn't always better
First and foremost, keep in mind that what appears to be the cheapest loan on the market might not necessarily be the best loan for you in the long term. For instance, it may not allow for flexibility if your circumstances change in the future.
Also watch out for 'honeymoon' deals that offer attractively low repayments for the first year or two, but then a higher interest rate that is locked in for the life of your loan, possibly with penalties for making additional repayments.
Understanding the features of a loan
Fixed versus variable interest rate
A fixed rate means the rate stays the same for the set period of time that you choose. A variable rate can move up or down according to market forces, which impacts the amount of interest you pay. Variable rates sometime offer greater flexibility, such as letting you make extra repayments and the ability to redraw money from those repayments. On the other hand, if you prefer the security of knowing exactly what your repayments will be for a given period of time, then fixing your interest rate is a good idea.
Macquarie home loans offer the flexibility of allowing you to have some of your home loan at a fixed rate and some of your home loan at a variable rate.
A home loan offset account is a good way to reduce the interest you owe. The money you deposit in your offset account offsets the balance of your home loan – with interest calculated only on the difference between your offset account balance and your loan balance.
If you have made additional payments on top of your minimum mortgage repayments, a redraw facility lets you withdraw these additional payments when you need to. Putting spare money into your home loan account is a great way to reduce the interest payable.
Being able to make additional repayments whenever you can is a valuable option as even a few thousand dollars extra per year can significantly reduce the amount of interest you pay and the term of your loan. You can make additional repayments without penalty when you choose a variable rate repayment strategy with a Macquarie home loan. Additional repayments can be redrawn if you find yourself in need of funds in the future.
Haven't quite saved enough for a deposit? A family guarantee can help you get approved on your home loan1. This is when a member of your family acts as your guarantor by using the equity in their home to provide security for your home loan. Usually the family member nominates a specific amount to limit their guarantee and exposure to risk.
We're here to help
Our experienced team of home loan specialists are available to help you make the right decision for your situation, with a range of award-winning loans to help you make your property dream a reality. Call 13 62 27 today.