Tags: Variable Home Loans, Best Home LoansInterest Rates | 02.12.15

Why you should shop around for a home loan

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Congratulations! You’ve found your dream home, now you’ve just got to get that home loan. Before you sign the dotted line, you need to ask yourself, are you really getting the best home loan? Here are some great reasons why you should shop around for a home loan.

Work out if you want a fixed or variable home loan

If you’re confused about what each means, it’s a good idea to do some extra research. Fixed rate home loans provide loan payments that won’t fluctuate over the life of the loan. A variable-rate loan may go up and down during the life of the loan, however, you can make early or additional repayments, and you may be able to access any additional repayments if you need to. Once you know and understand the difference, you can decide which is going to best suit your needs.

Home loans are negotiable

You may think your bank or lending institution may hold all the power, yet you may be surprised to learn that looking for a home loan is a lot like purchasing a car. Both the price and the terms of a loan can be negotiated. Start having a look for yourself and you will see just how much home loans can vary. In the end, you could end up saving yourself thousands of dollars.

Keep your options open and ask your friends

Whether you have done the research yourself, or used an online comparison website, once you have a list of potential lenders it’s good to ask your friends and family what institutions they have been happy with. Getting a real world opinion is also good because a bank or lending institution isn’t exactly going to tell you if they’ve ever had unhappy customers. However, if you hear it from people you know first hand, it could save you heartache in the long run.

Don’t sign if you don’t understand exactly what you are signing

A lot of people believe they are getting a great deal on their home loan, although it’s when things start to go bad that people realise they should have read the fine print. It’s important that you understand what kind of loan you have signed on for, and ask the important questions. Ask questions along the lines of what are the payments and when are they due, how much interest will you pay, and whether you have a fixed interest rate or variable home loan. If your mortgage broker won’t disclose the answers to these questions in a way that’s easy to understand, seek further financial advice before you sign.

Shopping around for a home loan basically ensures that you won’t get stuck paying much more than what you should. So, take the time and do it right the first time.

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