Getting the best interest rate for your needs is not always as simple as it seems and the seemingly cheapest rate is not always what is best for you. Here are three basic tips on how to get the best interest rate for your loan:
When searching for the right interest rate that will suit not only your loan but your circumstances too, decide whether you are looking for an introductory, fixed, variable, principal or split interest rate. Also learn whether your loan is an investment only or interest loan.
Researching and weighing up the different options is key to finding what you are looking for in the next 3 Tips:
1. Shop Around
Keep in mind that to apply for a loan at most mortgage insurers or Australian Banks one has to be in line with their specific criteria. Otherwise, getting a loan can be an expensive process due to varying costs between lenders and mortgage insurance when taking into account a loan that is say 80 percent or more on the loan price.Our advice – don’t settle on one of these loans, shop around for the best loan rates in town.
2. Say no to Honeymoon Rates!
Honeymoon loan rates sound like a sweet deal, however although they state to only run for 1 or 2 years, in reality your loan can last up to 30 years. This is because lenders want to keep you on as a client, so they charge a penalty amount after the introductory period of the loan to try and keep you on. Our advice – Don’t be fooled by the sweet talk.
3. Know the difference between introductory rates.
Introductory rates come in the form of “discounted fixed” and “fixed discount” rates. A discounted fixed rate is a rate that has been fixed (meaning it won’t change with the market) for the introductory part of the loan. However the benefit of having an introductory period can be lessened by lenders ‘capping’ the extra money that one may pay off the loan.
A fixed discount rate differs by being principally variable, but the ‘fixed’ term comes in when the loan rate is fixed at a certain point which is below the standard variable rate. With option the discounted rate will follow the market trends. Our advice – research into what is the best value loan on the market when it comes to introductory rates.
Still need our help when picking your loan? Contact us today on 1300 878 898, and learn more of what this means for you!