Top tips for comparing mortgage lenders in Australia

Posted on Wednesday, September 30, 2015 - 16:34

In the process of choosing one mortgage instead of another, a comparison is always more than welcome. But how can someone proceed in comparing two mortgages? What are the criteria that should be followed in the process? 

In order to get quotes, you have two options: you can go over the Internet and look up for mortgage providers online or you can consider checking out the local mortgage providers as well. Now, if you’d rather go for the second option, keep in mind that the local newspaper might hold precious information and reveal some of the most competitive mortgage lenders from your community.

Working with a local mortgage provider could turn out being more convenient for you than you might have thought. Putting together all the necessary paperwork can be quite exhausting and the whole process is even harder when the mortgage lender you chose can only be found in the online environment. The amount of paperwork you are required to make is significant, but if you chose to work with a local mortgage provider, the whole loan-acquisition process could be much simpler.

Here are some questions that you should be asking when looking for a mortgage, so you can make sure that you will get the best option for you and your income.

What is mortgage comparison rate?

Mortgage comparison rate is a tool which aids borrowers indicate the true value a loan, while at the same time enabling the borrower to compare different loans. A comparison rate should provide you with the following amount information with regard to your mortgage: the repayment frequency, the type of interest rate, the fees and charges accompanying the loan and the term of the loan.

Is fixed interest rate more profitable than variable interest rate?

One of the focal points you need to take into account when comparing and contrasting mortgages is whether to opt for a fixed interest or a variable one.

The fact is that a fixed rate will remain the same during the fixed period. Thus, you will always have to pay the same amount of money throughout the entire duration of the loan. But the question is – is it more profitable than a variable interest rate? And the answer is it depends. It depends on the market’s changes with regard to interest rate.

The main downside of opting for a variable interest rate is that the loan interest rate is the cash rate established by the Reverse Bank of Australia. When significant alterations take place, the odds are that the variable interest rate will be modified, and not always for your advantage.

Another aspect with regard to this issue is that variable home loans usually present the best repayment flexibility. That would be because it offers the borrower the possibility to pay off the loan without any penalties whatsoever.

What are reverse mortgages?

Reverse mortgages were established to Australia appreciatively 10 years ago. They have significantly increased in popularity among well-off individuals who wish to continue living in their home, whilst still presenting the necessary expenses they need to continue living the life.

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Filed Under: Home Loans