Don’t pay more for your home loans
31 August 2017 MO'R Mortgage Options
Variable rates are now anything but standard. Not only do the rates vary between lenders, but they can also vary within a lender, depending on the specific loan features you want as part of your home loan. The options you choose will determine how much interest you pay.
Follow these tips to ensure you don’t get caught out paying more for your home loan than you need to.
Select your repayment type wisely
To encourage borrowers to make Principle & Interest repayments (and actively reduce their debt over time), many lenders now charge a higher interest rate for Interest Only repayments.
Unless you are paying Interest Only repayments on your Owner Occupied loan as part of a broader strategy, you are likely to save money by switching to Principle & Interest repayments. Not only can you save money on a reduced interest rate, but as an added bonus, you’re also likely to pay your loan off faster.
Make sure you have the right loan
In response to regulators enforcing a 10% yearly growth limit on a lender’s investment loan book, lenders have increased the rate on investment loans.
If you bought your property to rent out initially but are now living there, don’t forget to switch the loan over to ‘Owner Occupied.’ Otherwise you will pay a higher rate of interest than you need to. No one wants to do that voluntarily!
Contribute as much as you can to the purchase price
Lenders have become more conservative with their rate discounts recently. They seem to be offering greater discounts to borrowers in strong equity positions or those with larger cash deposits.
If you can stick to borrowing no more than 80% of the purchase price (i.e. this means you need to save a larger deposit, get assistance from family via a security guarantee or buy something cheaper), you might secure a bigger pricing discount – and therefore pay a lower rate of interest over the life of your loan.
But that’s not all…
Whilst there are other factors affecting your interest rate, your selection of mortgage professional also has a lot to do with it.
An experienced mortgage professional team has strong relationships with the lenders they work with. Meaning you can benefit from increased rate discounts, faster processing times and superior loan structures.
An experienced team will not only establish your loans to minimize costs at the beginning but as your circumstances change over time, they’ll monitor your loans to ensure you don’t ever pay more than you need to.
An experienced team will continuously share their knowledge and expertise so you’re always finding out new ways to better manage your mortgage.
MO’R Mortgage Options is a Canberra based team of award winning mortgage professionals. For 17 years, our family team has assisted countless Canberrans save time and money on their home loans. Call us on 02 6286 6501 so we can do the same for you.