One common trap that nations fall into when they compare home loans is to just concentrate on the interest rate. Here we show you why that's dangerous and what you can do to avoid making inaccurate or misleading comparisons.
Interest rate is one factor that is certainly important when you compare home loans but it is not the only factor. You can get the services of house loans calculator whenever required.
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Fees and charges can rapidly change the shape of a loan, so this is a major thing that you must consider.
Make sure you know all the fees and charges upfront – including the start-up or application fees, any monthly or ongoing/account-keeping fees, as well as the charges for early loan termination ( for example, if you want to repay the loan early because of extra income.) All of these fees have the potential to make a low-interest rate loan suddenly seem far less attractive!
A much better guideline when you compare home loans is the comparison rate, which lenders must provide. This takes into account the interest rate plus all of the fees except the early termination fees, so it's a much better benchmark to use if you are trying to compare home loans on a like-for-like basis, which can often be difficult.
A good tip is to use a couple of financial calculators in conjunction with your home loan comparison research. One type is a maximum borrowing calculator so that you can work out what the banks are likely to lend to you, based upon your total income and your total liabilities.