Over the past couple of months the banks have been pushing a lot of attractively low interest rates. And with the possibility of a further rate cut in the near future, existing home owners and potential first home owners now have even more of an opportunity to refinance or get into the property market.
But before being seduced by the cheapest home loan rate, it’s critical that you first take a look at the comparison rate on the loan product.
The comparison rate helps you work out the true cost of the loan. It includes not only the advertised interest rate, but also most of the fees and charges relating to the loan which you wouldn’t normally see, and which have been reduced to a single percentage figure.
It will help you compare home loans from different lenders that have different rates and fees.
For example, a bank may offer a home loan interest rate as 4.05%. But when you add on all the extra fees and charges, the real rate might be 5.30%. To be fair and open, all banks must advertise the comparison rate and this is what you need to look for when you’re shopping around.
So before you sign on to a super low rate, make sure you have a look at the comparison rate first to see if you are really getting a bargain. Because in some cases, the lowest rate is not always the best.
If you need any help or advice, contact our Property Investment and Finance consultant Kym Russell on krussell@nievision.com.au to guide you through the numerous finance offerings available.
