We all like to believe we have got a good deal, and sometimes we see home loan rates that are so cheap that we all want a piece of the action.
Truth is, for many of us these ultra-low rates are unobtainable – but the alternative ‘ain’t half bad’.
There are many on-line sites which boast low rate home loans. Trouble is, these loans only apply to the chosen few; people in paid permanent roles, with a strong ability to make the repayments and who have saved up enough to pay at least 20 per cent of the property’s asking price with their own money. Nowadays there are many variations that could make such loans difficult to come by. For example potential borrowers could:
- Be on contract
- Run their own company
- Have part of their income as a pension
- Have limited savings
- Want an offset account
In such circumstances, would it be a disaster if your broker arranged a full-doc loan of 3.99 per cent for you rather than something slightly cheaper online?
Similarly, if you are looking to buy an investment property and your accountant anticipates that this will significantly reduce your tax bill, can an on-line lender take the benefit of this negative gearing into account when assessing your loan application? The chances are no, however your broker may be able to find you an investment loan at 4.14 per cent which also accepts these tax breaks as legitimate income.
On-line lenders can offer some great rates, but the chances are that if you want anything other than a vanilla loan, you are better off getting a broker to find you the best and the sharpest rate possible.
Graeme Salt – National Client Finance Manager, Chan & Naylor Finance Australia
Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.