How to compare and find the best home loan

A home loan is a big decision that you want to get right. Here’s some things to consider when choosing the home loan that meets your needs and current circumstances.

Whether you’re making your first step into the housing market, buying an investment property, or upgrading or downsizing your home, the home loan you choose has a huge impact on the next years of your life.

Home loans can be as unique as the people who are searching for them, so there’s no one-size-fits-all home loan. What you consider a good home loan may be different to what others think, and may even change depending on your life stage.

Generally, a good home loan is one with:

• Competitive interest rates that helps you pay the loan sooner
• Low fees, charges and establishment costs
• Features that are relevant and genuinely useful to you

How to compare home loans

Comparing home loans is the key to finding the best home loan that suits your needs. There are seemingly endless mortgage products on the market, so it’s a good idea to compare home loans in order to find the best fit for you.

There are many home loan comparison websites that can give a good overview of the differences between loan products. Money Smart suggests that when digging deeper into the terms and conditions it’s best to get a ‘key facts’ sheet from each lender you’re considering. This will give you the detail you need to make an informed choice, including the total amount to be paid back over the life of the loan, repayment amounts, fees and charges.

How to choose a home loan

Each lender is likely to have a range of home loans on offer, with options designed to suit different people with different needs.

In order to choose the right one for you, ask yourself a few questions:

1. Do you want variable, fixed or split? A variable interest rate can go up or down and allows you to pay extra, a fixed loan has the same interest rate for a set period of time (usually one to five years) but can incur penalties for making additional payments, and a split loan is part variable and part fixed.
2. What features will you really use? While a loan that has lots of added features might sound appealing, it’s generally true that the more features there are, the higher the costs involved with the loan. You might choose a no-frills loan that’s cheaper, however if you opt for one that offers more (redraw facility, repayment pause or an offset account, for example) you want to make sure you’re using what you pay for.
3. What are the fees? Home loan fees can include application fees, valuation fees, lender’s mortgage insurance, monthly and annual fees, and break costs if you want to get out of the mortgage.
4. What is the comparison rate? A comparison rate shows the true cost of a home loan, taking into account the fees, charges and interest rate. This puts each rate on an even playing field for comparing with other loans.

Australian Unity’s range of home loans offers competitive rates and features to suit all kinds of people.