Everybody wants to pay for very little for your mortgage as you can, but it could be wrong to believe that lower-rate products are automatically better.
In many ways, 房屋貸款 is sort of a meal or possibly a car or some shoes – the cheapest isn’t always the most effective.
Allow me to share five reasons why the item with the lowest rate is probably not all it’s cracked up to be.
The cheapest rate may not be the cheapest rate
Lenders like to entice customers as to what is called a ‘honeymoon rate’ – an artificially low rate that soon reverts on the higher ‘real’ rate.
As an example, a lender might provide a discount of .50 percentage points to lure from the borrower, but then move them to the real rate six months time to the mortgage.
One other reason the headline interest might be misleading is basically that you could turn out paying far more than you would expect once fees and expenses have been added on.
That’s why borrowers should check not only the headline rate but the ‘comparison rate’, that also incorporates fees and expenses. Sometimes, the comparison rate might be over 1 percentage point more than the headline rate.
Ultra-low mortgage products are often no-frills products, so even when they are as cheap as they look, they could be missing desirable features.
For example, you may choose usage of an offset account or redraw facility, or you may want the option for temporarily reducing or freezing your repayments – all of these could be absent.
For that reason, you could be better off picking a mortgage which has a higher rate but provides you with more control.
Another reason some lenders are able to offer 56dexkpky low rates is because don’t have to fund expensive branch networks – either simply because they have only a few branches or because they’re online-only operations.
But what if you would like the protection of always using a branch available? If so, you may want to choose a substitute lender, even though it indicates paying a little more.
Ultra-low variable rates are common fine and dandy, but what happens if you expect 房貸 to improve or you need certainty in order to better manage your financial situation?