Obtaining the Best Interest Rate on your Mortgage
Purchasing a home is undeniably a significant commitment, and it can be the biggest financial investment you have made until this point. That’s why opting for the best financing solution is a necessary condition.
The key to getting a good deal is pretty much influenced by the interest rate, as well as by other loan terms that should be carefully analysed in advance. So, how do you get the best interest rates for mortgages? The following tips are a decent ground to start with.
Compare Interest Rates
The variety of the best interest rates for mortgages is divided into fixed, variable, split, principal, introductory and investment types of rates. Each of these alternatives is related to a bunch of advantages and disadvantages, as it is expected.
For example, introductory rates either come as fixed discount rates or discounted fixed rates. The latter is a fixed rate, which won’t be altered by the market’s values, during the introductory part of the loan. The other one is distinct because of its variability, but the fixed term comes to motion at a certain point, if the market trends alter.
Depending on your budget and on your financial background, one deal may suit your specifications better than another one. There isn’t an all-time solution that works best for all borrowers.
The key is to research the market and look for the best interest rates for mortgages, without making a decision until you’re 100 percent sure that it’s the right choice for you.
Focus on Building a Deposit
Creating a deposit may seem quite unattainable to some borrowers. Nonetheless, the saying when there’s a will there’s a way is definitely applicable. It’s the little things that can make the difference. When you have the right motivation, you’ll be able to reach your objective.
To put it roughly, the bigger the deposit, the better the interest rate and loan terms. A deposit consisting of 5 percent of the total amount of the loan would cover only stamp duty and other legal fees. In truth, if your deposit is more consistent, the variety of financing options will be wider.
Don’t Undermine Your Credit Score
Getting the best interest rates for mortgages has a lot to do with your credit score. At the moment, positive credit reporting exists in Australia, and it’s distinct from the past when only adverse actions were communicated (unpaid loans, overdue credit cards, etc).
The bottom-line is that, by building a decent credit score, you can make a good impression on your lender, hence, obtain a more favourable interest rate. Bear in mind that this information enables your bank to establish how risky you are as a borrower. In short, the better the credit score, the lower the risk.
Stay away from Honeymoon Rates
By definition, honeymoon rates appear to be the best interest rates for mortgages. Typically, these last from 12 months to two years; however, the life of the loan term can reach 30 years. Since most lenders try their best at keeping you as their client, you’ll be due to pay a significant penalty if you want out after the introductory period.