If you are looking to purchase a home or an investment property, you will need to research which home loan is going to suit your needs. There are a number of home loans and loan providers in Australia to choose from, so how do you know which home loan is best? There are a few key considerations to take into account including interest rates, fees, features as well as your deposit amount.
Home Loan interest rates
Based on the average home loan rate offered by the banks, by shopping around to find a better deal with a competitor bank, a reduction in your loan rate by as little as 0.75% could save over $300 per month in interest on a $500,000 mortgage.
At APS Benefits we try to get the best deal for our members. This means if you are not eligible for a home loan with a bank then we might be able to help. However, our interest rates are traditionally higher than the major banks but once you become eligible for a lower rate bank home loan then we try and broker that loan for you.
It is important to note that many banks in Australia are now offering lower interest rates for new customers compared to current customers, so you are likely to save more by switching to a new home loan provider if you already have an existing home loan. You can learn more about refinancing your home loan here.
Home Loan Fees
Most home loans in Australia have fees that you need to be aware of including application fees, valuation fees, annual fees, early exit fees (generally for fixed rates) or even account keeping fees. Make sure that you look into these fees before choosing a borrower.
Loan to Value Ratios (LVRs)
All lenders offer different Loan to Value Ratios (LVRs). The LVR is the amount of your loan compared to the value of your property. LVR is calculated by dividing the amount of the loan by the value of the property and expressed as a percentage. For example, when the lender values your property at $500,000 and you have a $400,000 loan amount, if you divide your loan amount by the property value, you get an LVR of 80%.
At APS Benefits our maximum LVR is 80% of a sworn valuation.
Lenders Mortgage Insurance (LMI)
If you have less than a 20% deposit, you may need to pay an additional charge for Lenders Mortgage Insurance (LMI). Lenders Mortgage Insurance essentially protects the lender against potential losses in the event of a mortgagee sale when a borrower is unable to repay their loan. It’s important to note that LMI offers no protection to the borrower.
APS Home Loans
If you have any questions about home loans, the APS team are here to help. We not only offer our own home loan product but also a free Mortgage Broking service to help you find a lender that matches your needs. Get in touch today to learn more.