Are cheap interest rates effective long term?

You might find yourself researching on the internet, walking past a bank, listening to the radio or even watching TV to which you will often see and hear of home loans with super low interest rates on offer and that you should visit the nearest branch. In many cases the home loans advertised with the lowest interest rates are not always the most suitable option out there for you and your greater term goals or quite simply many applicants will not qualify. This is seen as a way to bait potential new clients and provide alternate services.

Some things that will work in your favour when it comes to applying for finance with lenders and achieving sharper rates and more suitable products are:

• Have a good history with repayments made on time, or previous finance debts repaid early with no defaults.
• If you have an LVR under 80% this will allow you to get some greater discounts on your interest rates and eliminate the cost of LMI.
• The higher amount of total lending you have with a particular lender will most of the time allow for bigger discounts to be passed on to you, but in saying that it is not always good to have everything with the one lender.
• Deal with an experienced finance broker as they will find the most suitable option for your situation and help to set up the most efficient loan structure that will correctly work for you.

When you talk to a mortgage broker about getting a home loan whether it be for an own home or investment use, they will not just look for the cheapest rate on offer but the most suitable product for the situation. There are many factors taken into consideration when a mortgage broker conducts their research and while aiming to search for the cheapest rate available to you they also need to find the most suitable loan product for your situation that will help you to achieve not only your short term goals but also factor in the long term goals.

If you obtain finance with a lender with the lowest rate out there it doesn’t mean that it will be suitable for your situation at the present time but also may constrain your ability to make more property purchases down the track. Just because it is cheap now doesn’t necessarily mean it will be a cheap option over the coming years and most of all may not be working correctly for you.

Clients may walk into a bank that has a cheap rate on offer and talk to a lending specialist about getting a home loan with the desired rate. What has happened in some cases over time is after the application has been submitted and settlement has taken place, the rate applied for has gone up or in other cases only months into the loan being settled the rate spikes to a level higher than what a mainstream lender had on offer at time of the initial application and with less fees. This is another reason why it is good to be dealing with a mortgage broker as they will find the most suitable option with the right balance of features, fees and interest rates on offer along with finding a loan product that is cost effective and most of all suitable for you.

If you have any queries or a question regarding specific information around loan products, interest rates or to find out your options, click here to talk to your mortgage broker Gerry and he will be able to assist with answering any questions.