Chances are you have a mortgage. Or you had a mortgage, or you are thinking about getting a mortgage. Otherwise you probably wouldn’t be on this site right now.
For most people a mortgage is as much a part of their lives as a car or a smart phone might be. However, obviously a mortgage is a much bigger deal and getting it wrong or not getting the best deal could cost someone thousands of dollars in extra payments over the normal life of a mortgage.
A mortgage, also known as a home loan, is pretty much the only way most Australians can get into their own home and fulfilling the great Australian dream. Nowadays, mortgages can be obtained online through the internet, through a mortgage broker and of course through traditional sources such as banks and credit unions.
As competition gets stiffer, and mortgage providers all compete for your business, mortgage products keep evolving and adapting to be at the number one spot. This means there is an array of mortgage products on the market and choosing the right one for you can be confusing, intimidating, and very costly if you get it wrong.
Interest Rates & Mortgage Options
Often interest rates are an important factor when deciding on a mortgage to apply for. However it is not always the case that the mortgage with the lowest interest rate is the best mortgage for you. Let me give you an example; you maybe the type of person who likes to put all their money onto their mortgage and try and pay it off as quickly as possible. If this is you then you may not have the best of savings. A cheapy mortgage with the lowest interest rate may not provide for a redraw facility. So you have worked for ages and become way ahead in your mortgage repayments but decide to go on holiday, buy a new car, renovate, etc. you get the picture. Without a redraw facility you have no access to all that money you have put away on your mortgage. However, the mortgage that allows you to redraw may cost you a tiny little bit more in interest, but comes with at least some flexibility.
Remember that a mortgage is a long term commitment and that your current situation and what seems suitable now may change in the future. You should allow for changes, regardless of how impossible they may seem.
Other options you should consider in a mortgage are the fees, for example monthly account keeping fees, redraw fees, and early termination fees where the financial institution may charge you big time if you decide to payout your mortgage early.
And the biggest option of all – variable or fixed or a combination of both. You’ll pay a bit more (a higher interest rate) to lock in a fixed rate but if the future seems to hold a series of interest rate rises it may well be worth going for a fixed interest rate.
Do It Yourself Home Loan
If you’re fairly clued into personal finance and know what you’re looking at then you might be able to source your own home loan online. Fittingly, our current era provides for a multitude of online options when it comes to home loans. If you have the time to spare and you’re happy to take the responsibility, you may well find yourself a decent bargain online.
Banks are keen for your business and will often provide great service to win your business. If you are loyal to one bank (or other financial institution) then you’ll no doubt find them very willing to give you a good deal to get your business. You may have to be a bit pushy with them but with a little encouragement, you should be able to get a deal that you find satisfactory. The drawback with going to a bank though is you are limited to their products which may or may not be suitable for your situation.
Mortgage brokers are also a great resource if you’re looking to get a new mortgage. The typical mortgage broker will have access to a range of lenders thus being able to offer you a wide array of options when it comes to mortgages. The second advantage of mortgage brokers is that they normally will do all the leg work for you, i.e. because they deal with mortgages all day long they are on top of the market and new products which will save you time in research and ultimately money. Lastly, a mortgage broker gets paid by the lender and a typical mortgage broker will not charge their clients for their services.
Whichever your preference, there are plenty of options and many people after your business. Ensure you do your due diligence and be confident in the decision you make. Owning your home is very satisfying and shouldn’t be spoilt by troubles with your mortgage.