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Variable / Fixed | 16.08.18

How Do I Find the Best Home Loan for Me?

For most of us, taking out a home loan is likely to be one of the most important financial decisions you’ll ever make. It’s a long-term commitment. Even what might seem like small differences in the terms, conditions and features of loans offered by the different lenders can make a big difference to your overall goals, repayments and financial position in the long run.

In this article, we’ll explain how to find the best home loan to suit your specific needs.

How much deposit do I need?

Different lenders have different maximum loan-to-value ratio (LVR) ratio’s and policies. The LVR ratio determines the maximum loan amount (as a % of the overall purchase price) the lender will provide you.

For example:

Some lenders may offer an LVR of 100%, but to compensate for this higher risk they will inevitably charge you a higher interest rate and/or charge additional fees.

Some lenders may also have different LVR policies depending on factors such as:

What are the most important home loan features?

The interest rate on a home loan is obviously an important consideration, but it shouldn’t be your only one, nor should you look at it in isolation from other loan features.

For example:

It is important to consider a home loan as a complete package and to choose the one that is most appropriate for your individual circumstances. Ideally, a home loan needs to be flexible because your situation may change over time.

For example, some lenders may offer any or all of the following features that may be beneficial for you:

What is a comparison interest rate?

By law, lenders have to display two interest rates for their loans – a nominal or advertised rate and a comparison rate. The advertised rate is lower, but the higher comparison rate is a more accurate indicator of the total cost of the loan because it takes into account the impact of any associated fees and charges.

Some lenders offer lower introductory or “honeymoon” rates at the start of a home loan to attract borrowers, particularly first homebuyers. These rates only apply for a limited time.

The only accurate way to compare interest rates between lenders is to use the comparison rate.

What type of loan should I get?

There are a variety of different types of home loans available. These can be broadly categorised based on their interest rate and repayment structures. For example:

What home loan fees might I have to pay?

Depending on the loan and lending institution’s policies, you may be required to pay any or all of the following fees:

At Tomorrow Finance, we can help answer all of your home loan related questions and find the best possible loan for your specific circumstances.

As Australia’s leading home loan comparison and referral service, we are committed to helping Australians find the right home loan. There’s no obligation and our service is 100% free.

To speak with the experts from Tomorrow Finance phone 1300 754 562 or enquire online.

Back « 4 Typical Misconceptions About Home Loans
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