This is the first in a series of short posts to provide some insight into the world of home loans.
Navigating the maze of loan options.
It’s not easy picking the right loan for you and your situation. There are many considerations, and while a big one is the interest rate, it is not the only factor to consider.
Firstly, which lender should you choose?
A good broker can provide you with information about the best type of loan for your situation. If you bank with Bank A and they have a product that suits all of your needs, and the rate is competitive, it's a simple choice. You already have internet banking access, you have a transaction account with direct debits and cash cards, it is very easy to not move away from Bank A. Then your broker lets you know that Bank B has a discounted interest rate loan with all the same features, and Bank B has a better reputation for giving back to the community. Clearly you need to make a decision based on your values, price and the big picture.
Have a think about what is important to you. I have had clients who have stated that they are more interested in the ethics of the lender than in the products and rates offered. To some, it is very important to have a branch network so they can pop in to make transactions. Others prefer to stay with a bank that they have been with for many years, although these days this is more about not having to change to a new internet banking platform and switch direct debits, rather than loyalty.
If ethical lending is impartant to you you can research which lenders are aligned with your values here:
Let your broker know if you have a lender preference. They can present you with options for that lender and others, and then help you to decide which is in your best interest. It is worth noting that with fast payments between banks, you could have your loan with one bank and your everyday account with another without much impact on transaction times.
Whether you do your own research, or use a broker, always consider more than one lender and then consider the products that they offer - I'll dig a little deeper into this in a future post about loan features.
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