With the RBA lowering the official cash rate for two consecutive months and hitting a historical low of 1.00 in July 2019 – many banks and lenders have followed suit and also dropped their home loan offerings.
So all this talk about home loan interest rates dropping begs the question – are they really that important?
Yes, home loan rates are still very important BUT there are other aspects to consider if you’re looking for a new home loan.
Here are some questions you need to ask yourself to help discover whether a particular home loan product is for you.
Do you need certainty?
Low interest rates sound amazing, however it’s important to note that most of these offerings come with a fixed term.
You’ll need to consider whether a fixed loan or variable loan would suit you. Do you want the certainty of knowing your repayments in a fixed home loan, where you can plan your repayments within your budget, knowing they won’t change for a while?
Or would it suit you more having the ability to utilise more features which usually come with a variable home loan?
Do you need flexibility?
So, you’ve seen a home loan offer with a new, low interest rate. But does it have all the features you would need to suit how you want to repay your mortgage and organise your cashflow?
You might need an offset account, to give you the ability to use a separate deposit account for your everyday spending while still working to reduce the amount you pay on your home loan.
Along the same lines, a redraw facility might work well for you where you have the opportunity to make extra payments, while still having the flexibility to access the excess if you need it.