When you’re starting out with securing a home loan or investment loan, you need to start with the end in mind – or at least plan for a couple of years down the track. This helps to make sure your loan is structured in a way that will work for you now and in the future.
Although interest rates are important to take into consideration, there are other options that are equally important.
Things to consider for your next loan are:
- Interest rate
- Fixed interest or variable, or a combination of the two
- The term of the loan – usually anything from 25 – 40 years
- Principal and interest or interest only
- Fees – establishment fees, ongoing fees, discharge fees, penalty fees
- Repayment frequency
- Offset facility
- Redraw ability
- Interest in advance option
- Additional payment options
- Access – internet, phone, branch, ATM
When you sit down with your broker, these are some of the options that you’ll go through before settling on the loan that best suits your needs.
Right now, you might think that a cheaper loan with limited flexibility is a great option because you’ll make the biggest dent in your debt. But if you’re planning on kids in the next couple of years, or if there is any insecurity in your employment or if you get a big promotion and want to leverage your home to buy an investment property, cheap and inflexible may end up costing you more in the long run.
Put some thought into it and talk through your options with me. The more I know about your plans, the more I can help find the best match for you.