You would have all seen the advertisements by now – all the big banks and many others have slashed their fixed rates for home loans, in a new pricing war.
4.99% fixed for 5 years, is the going trend. With one lender (non big 4), slashing their 5 year fixed rate to just 4.94%.
But, can you rely on these numbers alone?
Of course not!
Whilst comparison rate is something most people are not familiar with, this is one of the vital signs, as to how much your loan is actually costing you.
Where one bank may charge $395/p.a. annual fee, this is $11,850 over the life of your loan. $395 per year is equivalent to the average homes water rates for 6 months – and we would all love to be given the equivalent of free rates for half of every year!
You have to add this fee to your interest rate to see how much your loan is really going to cost you.
Here are some of the *comparison rates from some of the major players for their 5 year fixed rates, advertised at 4.99% –
5.13%, 5.67%, 5.52%, 5.40% (and for the 4.94% rate, this in actuality compares at 5.21%)
None of which are apples with apples!
*The comparison rate is based on a secured loan of $150,000 for a term of 25 years. Warning: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate.
At Bee Finance Savvy, we can show you exactly how much your loan is predicted to cost over the selected term, based on the current rate you are signing up for!
So you can see the importance of speaking to a knowledgeable person, whom has the ability to choose amongst a variety of lenders, and whom isn’t just working for one particular bank.
As, naturally, your bank manager will only show you the products from their bank.
Is this going to save you the most amount of money? Probably not!
Is this going to be the most convenient for you?
You can read more about the cost of so-called convenience soon, in our upcoming article – “Would you pay someone $10,000 to send 5 emails for you?” Stay tuned!