Everyone wants to pay very little for our mortgage as possible, but it could be wrong to believe that lower-rate merchandise is automatically better.
In some ways, 房屋貸款 is sort of a meal or possibly a car or a set of shoes – the most affordable isn’t always the ideal.
Here are five factors why the merchandise with the lowest rate might not be all it’s cracked around be.
The lowest rate may not be the best rate
Lenders like to entice customers using what is called a ‘honeymoon rate’ – an artificially low rate that soon reverts on the higher ‘real’ rate.
By way of example, a lender might offer a discount of .50 percentage points to lure inside the borrower, but then move these people to the genuine rate six months into the mortgage.
Another reason why the headline interest could be misleading is you could turn out paying considerably more than you would expect once fees and charges have been added on.
That’s why borrowers should check not simply the headline rate but the ‘comparison rate’, which also incorporates fees and charges. Sometimes, the comparison rate may be more than 1 percentage point higher than the headline rate.
Ultra-low mortgage merchandise is often no-frills products, so even though they are as cheap while they look, they may be missing desirable features.
By way of example, you may choose access to an offset account or redraw facility, or you might want a choice of temporarily reducing or freezing your repayments – all of which could possibly be absent.
As a result, you might be more well off deciding on a mortgage that has a higher rate but provides you with additional control.
Another reason some lenders can easily offer 56dexkpky low rates is that they don’t have to fund expensive branch networks – either mainly because they have just a couple of branches or because they’re online-only operations.
But what if you want the security of always using a branch available? In that case, you might like to choose a substitute lender, even if it means paying a little bit more.
Ultra-low variable rates are all fine and dandy, but imagine if you expect 房貸 to increase or else you need certainty in order to better manage your financial situation?