Discover how to find the best home loan rates on the market with Joust.
Do you have the best home loan rate for your needs? Maybe you’re looking for a loan to buy property, or maybe you’re concerned you’re paying more than you should be. Either way, it’s important to always review your home loan rate to see how it compares to what’s on the market.
At Joust, we’ve made it our business to help you find the best home loan rate. We use your basic information to entice lenders to fight over you and bid with some of the best home loan rates available, making sure you end up with maximum competitive tension and a potentially lower rate than what your current bank has provided.
Read on to see our top five tips for getting the best value out of your home loan.
Don’t hesitate to switch home loans now
It’s important to remember you can move your home loan to another lender to get a better rate. A lot of people don’t do this because they think they can’t, or they think it’ll be too much of a hassle.
However, if you can get a better rate at a different credit provider, then it could be worth your time and money in the long run. It’s becoming increasingly easier to switch home loan providers, but before you do, check the fees your current provider will charge for discharging your home loan.
Interest rate break costs only apply to fixed-rate loans. The costs associated with discharging variable rate loans are typically between $300-$500. You should be able to find more information about this in your original mortgage agreement.
Ensure a strong credit score before applying
When it comes to securing a low mortgage rate, you need to be in the best financial position to do so. You can strengthen your credit rating by always honouring your financial commitments — like paying bills on time, having a saving regime in place, and making wise financial decisions.
The recent introduction of Comprehensive Credit Reporting means lenders are able to assess your financial behaviour in its entirety, and this includes small things such as paying your phone bills on time. Ensuring you are financially responsible will help you secure the best home loan rate.
Understand the difference between Variable and Fixed Rates
There are two broad types of home loans that lenders offer:
- Fixed interest rate loans: A fixed-rate home loan means you’ll pay the bank exactly the same amount every month and your interest rate will not change for the fixed-rate period.
- Variable interest rate loans: Variable rate home loans may change several times over the loan lifetime. If the interest rate goes up, you’ll be paying more, but if rates go down, then you’ll pay less interest.
It’s important to understand the difference between these two rates, as they can have a significant impact on your home loan repayments and costs. Take some time to determine which of these two options will work best for you and your situation.
Look for home loans without fees
Many credit providers charge monthly or annual fees in exchange for them looking after your home loan account. These fees increase your monthly repayments and are usually in exchange for a number of features that come packaged with your home loan.
However, it's possible to get these features without having to pay the monthly or annual fees and over the entirety of your loan, you can save a significant amount of money. When looking for a home loan, it's wise to look for options that don't involve monthly or annual fees.
Focus on the comparison rate
When comparing home loans, you might notice you’ll be presented with an advertised rate and a comparison rate by your lender — but it’s the comparison rate you want to stay focused on.
- Advertised rate: This rate is what you’ll have to pay back for your mortgage each month. But it will only show you the value you pay for the interest.
- Comparison rate: This rate takes into consideration any monthly or annual fees and charges associated with the home loan package you’re being offered, presenting you with your ‘total effective rate’.
Be sure to stay focused on this comparison rate so you can make sure you are getting the best home loan rate.
READ MORE: Get a deeper understanding of comparison rates here
Assess the size of your down payment or deposit
Most lenders require a 20% down payment or deposit, meaning they’ll loan you 80% of the property purchase price. With the continual rise of house prices, this makes it harder for the new generation of prospective homeowners.
There is some good news — some lenders, under certain circumstances, are willing to loan up to 95% of the purchase price. The caveat is most of them require mortgage insurance and issue higher mortgage interest rates. So while this might seem like a good offer, the reality is these types of loans can place borrowers under financial strain down the track.
Borrowers who are unable to meet the 20% deposit requirement could also look to a guarantor loan, where a guarantor offers part of their home equity to top up your cash deposit.
See if you're eligible for special mortgage programs
There are a number of special programs that offer mortgage rate discounts and lenders mortgage insurance waivers. You may be eligible for these benefits, if you are a:
- Current or former member of the Australian Defence Force
- Medical professional
- Certified Practicing Accountant or CPA
- Lawyer and solicitor
Generally, these programs require borrowers to meet certain criteria, so it's best to consult an expert mortgage professional who can talk you through what’s required.
Use a home loan calculator
Our home loan calculators can help you uncover the potential savings you’ll make over the long term.
