Getting the right home loan is a big deal
You need to pick the right lender, choose a fixed or variable rate (or both) all while making sure the loan matches your financial goals. There's lots of information you need to take in and we're here to give you all the information you need to put yourself in a better financial position when you get a home loan.
What's Important When Comparing Home Loans?
Your Financial Goals - The first thing you'll need to determine is what your goals for the loan are. Depending on if you're a saver, investor or starting a young family, you're going to need different things from your home loan and there are home loans that suit each type of borrower.
The Loan Purpose - The purpose of your home loan will make some lenders and loans more attractive than others. Some lenders will lend more money for certain loan purposes such as property investment and refinancing.
The Lender - There are a range of different types of lenders who cater to the needs of many different borrowers. On Loan Market's panel of lenders, we compare the loans from the lender groups such as the Big4 Banks, Small Banks, Regional Banks, Non-Bank Lenders and Mutual Lenders.
Your Deposit Size - Your deposit size and level of savings is a significant factor in comparing home loans. Your deposit size will be used to calculate your Loan-to-Value (LVR) ratio which will determine if you need to pay Lenders Mortgage Insurance (LMI). You also need to budget for the costs involved with both purchasing a property and establishing a loan - which can cut into the size of your deposit.
Your Borrowing Capacity - When you are shopping for a home, your borrowing capacity will help you determine how much you can spend on a house. Your borrowing capacity will vary from lender-to-lender and it should only be used as a rough estimate until you have a proper pre-approval done by a mortgage broker.
Types of Loans - Our loan comparison allows you to compare fixed rate and variable interest rate products separately. Both products have advantages and disadvantages and its worthwhile speaking to a mortgage broker who can advise which type of product suits your financial goals.
A Mortgage Broker - A mortgage broker can go much further than comparing the interest rates of the lenders on its panel. A mortgage broker will take the time to understand your financial goals, your current situation and then recommend the products that are right for you. A mortgage broker has relationships with 30+ lenders and can negotiate between several lenders to get you a lower rate.
Things to remember:
• The lowest interest rate may not be the most competitive product
• The bigger the deposit, the less you need to borrow.
• Your deposit may not be as big as you think - there are costs involved with establishing a loan and buying property.
• Pre-approval from a lender will give you an exact figure on how much you can spend.
• There are smaller and regional lenders that offer competitive options outside of the big4 banks.