How to Properly Compare Home Loans and Make Informed Decisions 


Securing a home loan is one of the most significant financial decisions you’ll make. With a plethora of options available, it’s essential to compare home loans thoroughly to ensure you’re choosing the one that suits your financial situation and goals.  


The process of comparing home loans can be overwhelming and confusing at times, so to help you get the best home loan possible, we’ve put together some of the best tips on how you can get a cheap home loan. 



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Different Types of Loans 


One of the most important things to understand when looking for the perfect home loan is that there are several different types of loans that can come with very different rates and conditions.  


The two main loan types to focus on are Variable Rate and Fixed Rate, however it is possible to have both at once. 


Variable Rate: Variable rate home loans have interest rates that fluctuate in response to market conditions. While they offer flexibility, they can also expose borrowers to potential rate increases. 


Fixed Rate: Fixed rate loans have a set interest rate for a predetermined period, usually 1 to 5 years. This offers borrowers rate stability and makes budgeting more predictable. However, fixed-rate loans may have limited features and flexibility, and they are often more difficult to get out of if you get stuck with a high rate. 


Split Rate: Split rate loans allow you to divide your loan into fixed and variable portions, allowing you to have a certain percentage variable while the rest is fixed or vice versa. This gives you a balance between stability and flexibility. 


Fixed vs. Variable Rates 


The choice between fixed and variable rates depends on your risk tolerance as well as the current state of the loan market 


It’s best to choose a fixed rate if you believe interest rates will rise and you want rate certainty. However, you might miss out on potential savings if market rates drop. 


If you’re comfortable with fluctuations and believe rates might decrease, on the other hand, you should opt for a variable rate. Variable rates often come with more flexible features, such as extra repayments and redraw facilities. 



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Deposit and Fees 

Another major factor in comparing home loans is looking at the fees for each option. The fees will vary depending on the lender and package and can even outweigh a higher interest rate by coming with considerably fewer fees. 


Deposit: The amount you have for a deposit affects the loan-to-value ratio (LVR), which in turn affects the interest rate and potentially requires you to pay lender’s mortgage insurance (LMI). Generally, the greater your deposit, the better, but some loans will require a certain LVR to get the loan at all. 


Other Fees: Compare establishment fees, application fees, and other upfront charges that might vary among lenders, as well as the ongoing fees such as monthly account keeping fees. Like a good accountant will tell you, every dollar counts, so it’s best to get the best deal, no matter how small the fees may seem. 


Loan Features 


On top of the loan itself, some loans may come with additional benefits or features that can tip the scale and save you even more money on your loan when used correctly. 


Some of the best features to look out for include Offset Accounts, which are essentially a bank account linked to your mortgage, allowing you to save money on interest, Extra Repayments, allowing you to make additional payments to pay your loan off sooner, and Redraw Facilities, which allow you to take out some additional repayments you’ve made for urgent matters. 



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Using a Broker 


Getting the help of a mortgage broker can simplify the comparison process and ensure you get the best possible outcome. 


With a broker, you will get quick access to multiple lenders, giving you access to a very wide range of loan products, some of which may not be accessible on your own. With this access, you also get advice on loan features, rates, and more from experts with years of experience. 


A broker will also be able to negotiate with lenders due to established relationships, allowing you to get an even sharper deal.By getting these benefits delivered to you, it also allows you to save a tremendous amount of time. In the time it takes you to completely look through the options of one or two lenders on your own, you could already be in your own home! 


Not only are the team at Glass Financial experts when it comes to mortgage broking, we are also mortgage advisors, which means that on top of everything a great broker can help you with, we can also provide you with valuable information and advice on your mortgage and beyond that you won’t be able to get with just any broker. 


So, speak with the Glass team today on 1300 245 277 or send us an email to [email protected]  

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