How to shop for the best home loans
One of the biggest investments you will make in your lifetime is buying your own home. Many people will spend hours or days researching the cheapest possible price for flights or hotel accommodation, but when it comes to researching the best home loans, they leave it up to chance – potentially costing themselves thousands of dollars.
Being extra vigilant about this process is important, as making the wrong call can end up costing you tens of thousands of dollars (or more) over the life of the loan.
So, here are some tips on how you can shop for the best mortgage rates:
Tip 1: Know your credit file
Before you start shopping for loans, it’s a good idea to review your credit file to make sure you’re not going to run into any issues when applying for finance. Get a copy of your credit file at least three months before you start shopping for home loans, so you can try to fix errors if there are any. You can request a copy of your credit file for free from Veda Advantage.
Tip 2: Choose a mortgage type
There are several types of home loans that you can choose from, depending on how much you want to borrow and how long-term your mortgage is. The two main types are fixed rate and variable rate mortgages. Going for a fixed rate mortgage means your loan has a fixed interest rate for the entire loan term, giving you certainty and stability in your repayments. Otherwise, a variable rate mortgage has an interest rate that can change. The right loan for you will depend on your budget, goals and risk appetite; be sure to speak to your mortgage broker about the benefits and drawbacks of each type before you make a decision.
Tip 3: Compare mortgage lenders
Use the Internet to your advantage. There are many comparison websites that you can use to compare mortgage loans side by side, like RateCity, Your Mortgage and Canstar. You may also want to enlist the services of a mortgage broker who will find a suitable lender, along with the most suitable products, for you.
Tip 4: Be sure to factor in additional costs
Just because a loan has a low interest rate doesn’t mean that it’s the best mortgage for you and your situation. For all you know, there might be hidden fees that would significantly drive up your home loan cost. Consider all the underwriting fees, broker fees, application fees and settlement costs before choosing a lender.