Everybody wants to pay for as little for our own mortgage as possible, but it could be wrong to assume that lower-rate goods are automatically better.
In many ways, 房屋貸款 is sort of a meal or a car or a couple of shoes – the most affordable isn’t always the most effective.
Here are five explanations why the product with the lowest rate is probably not all it’s cracked around be.
The lowest rate will not be the smallest rate
Lenders love to entice customers in what is called a ‘honeymoon rate’ – an artificially low rate that soon reverts on the higher ‘real’ rate.
For example, a lender might give you a discount of .50 percentage points to lure inside the borrower, but move these to the genuine rate 6 months into the mortgage.
Another reason the headline rate of interest might be misleading is you could wind up paying significantly more than you would expect once fees and expenses happen to be added on.
That’s why borrowers should check not only the headline rate but also the ‘comparison rate’, that incorporates fees and charges. Sometimes, the comparison rate can be greater than 1 percentage point higher than the headline rate.
Ultra-low mortgage items are often no-frills products, so even when they really are as cheap as they look, they could be missing desirable features.
For instance, you may choose entry to an offset account or redraw facility, or you may want the choice of temporarily reducing or freezing your repayments – which all may be absent.
Consequently, you might be more satisfied picking a mortgage that includes a higher rate but provides more control.
Another reason why some lenders can easily offer 56dexkpky significantly lower rates is because don’t must fund expensive branch networks – either simply because they have just a couple of branches or because they’re online-only operations.
But what if you wish the safety of always developing a branch on hand? If so, you might like to choose an alternate lender, regardless of whether this means paying a little bit more.
Ultra-low variable rates are all well and good, but can you imagine if you expect 房貸 to enhance or maybe you need certainty to help you better manage your financial situation?