We all want to pay very little for the mortgage as possible, but it would be wrong to imagine that lower-rate products are automatically better.
In a few ways, 房屋貸款 is sort of a meal or a car or a set of shoes – the least expensive isn’t always the very best.
Listed below are five reasons why the product using the lowest rate is probably not all it’s cracked around be.
The cheapest rate is probably not the cheapest rate
Lenders want to entice customers using what is known as ‘honeymoon rate’ – an artificially low rate that soon reverts on the higher ‘real’ rate.
By way of example, a lender might give you a discount of .50 percentage points to lure from the borrower, but move these people to the genuine rate half a year into the mortgage.
Another reason the headline interest could possibly be misleading is that you could find yourself paying considerably more than you expected once fees and expenses are already added on.
That’s why borrowers should check not simply the headline rate but the ‘comparison rate’, which also incorporates fees and expenses. Sometimes, the comparison rate might be greater than 1 percentage point more than the headline rate.
Ultra-low mortgage products are often no-frills products, so even when they really are as cheap because they look, they might be missing desirable features.
For instance, you might want access to an offset account or redraw facility, or you may want the option of temporarily reducing or freezing your repayments – which all could possibly be absent.
As a result, you could be better off selecting a mortgage that includes a higher rate but offers you additional control.
Another reason some lenders can offer 56dexkpky significantly lower rates is because they don’t must fund expensive branch networks – either since they have only a few branches or because they’re online-only operations.
But what if you wish the safety of always using a branch available? In that case, you might like to choose a different lender, even if it implies paying a little more.
Ultra-low variable rates are well and good, but what if you expect 房貸 to boost or you need certainty so that you can better manage your money?