Noel Whittaker is author of many books on personal finance and regularly publishes Making Money Made Simple in the Sydney Morning Herald.
Noel’s recent article says the debate about housing affordability, and speculation about the direction of interest rates, have brought housing loans back into the spotlight.
He explains many borrowers are even considering changing lenders to take advantage of what may seem to be a cheaper rate. And says….
“Unfortunately, it is not as simple as it sounds.”
Even if you did find a friendly bank, you will almost certainly end up confused, as there are now over 1000 different home loan products in the market. Sorting through them is just as tricky as working out which phone plan is best for you.
A useful guide is the comparison rate that all lenders are required by government legislation to provide, but keep in mind that it is only a starting point. Even though it includes the basic loan costs, such as set-up fees, interest rates and ongoing charges, it does not include bank fees that are only charged in certain circumstances.
“One of the most important things to consider is the loan’s flexibility.”
But there is more to a loan than the interest rate and the fees and charges. One of the most important things to consider is the loan’s flexibility. You might believe that a no-frills loan with low fees is perfect for you right now because your affairs are simple and your present intentions are to stay in the one house for many years, but keep in mind that change is always with us, and your present loan may not be appropriate if things change.
What happens if you decide to move house, or borrow some money for renovations or investment, or need to reduce your repayments when the kids are at high school? If you have a no-frills loan it might not have a redraw facility and you might be required to take out a second mortgage for the extra money. Naturally the bank will be looking for a higher interest rate on the second mortgage.
We take time to listen and understand your plans
At Craig Tracey Lending we take time to listen and understand your plans for now and into the future. We give you all the information you need in simple language that is easy to understand – we call it your “Borrowing Plan”. Click here to find out more details: Your borrowing plan
Read the full article by Noel Whittaker here: SMH Article 21st Feb 17