Australian Home Loan – Know Your Options
When applying for an Australian home loan, make sure that you know exactly how much your loan will cost and how much interest will be added to the principal amount to come up with the total cost. It is also necessary to read the fine print to ensure that you understand all aspects of your expected contract. You are completely aware of any penalties that may be incurred should you decide to pay off the loan earlier than planned. To ensure that you get the lowest possible rates for your Australian home loans, it will be prudent to shop around for the best rates from a reputable lender. One way in which this can be done is by ensuring that several different financial institutions approve your application for the loan.
Reach Out to the Lenders
The first step that you should consider searching the market for home loans is to compile a list of potential lending institutions. Once you have narrowed your list down to these four banks, you should contact them and apply for an estimate. This estimate is the bank’s base rate, the amount that they would charge you for a one-year mortgage if you applied for a mortgage of that amount. The lending industry uses a number of factors to arrive at their final APRA lending rates, such as loan-to-value ratios, payment risk, and credit quality.
Check All Options to Get the Best Rate
If the APRA base rates suggested by your lender are too high, you can still reapply for loans through other Australian banks. There are several non-APRA banks in Australia that offer high-interest mortgages, sometimes even higher than those offered by APRA-insured banks. You will need to use caution when applying for an interest rate on a high-risk product, such as high-interest mortgages. Although the APR might not be as high as the APR, the interest rate charged is based on a risk level assessment formula, and higher interest levels are often added to the APR to increase the resulting loan balance.
As you search the mortgage market for Australian home loans, keep in mind that lenders are competing for your business, so it is necessary to shop around. Most investor’s loans are processed within a week of being applied for, so it may pay to submit multiple applications if you want to be sure you get an interest rate you can afford. To learn more about investing with APRA-insured banks, register for a free mortgage guidebook.
