You’ve found a home, but have you decided on what home loan suits?
Often people compare the various banks saying the best loan is the one with the lowest home loan rates.
In many ways that is due to the way the banks have promoted home loans. They tend to focus on what is easy to explain, rather than talking about what makes a good home loan.
The home loan rates are important, but this should be just one consideration when selecting a home loan.
Your Home Loan Should Suit Your Lifestyle
When you visit a bank you are limiting yourself to the home loans which that bank can offer.
Of course the person will tell you that the home loan they offer is fine and may explain some of the features, but they not typically talk about the features and benefits of another banks loans.
Most of the best New Zealand mortgage brokers will select a home loan that suits your situation and your future goals.
Think about what might be important to you;
- Do you want to be able to pay your mortgage off faster? It can save you a lot of money over time and protects you from any future interest rate increases.
- Are you planning to start a family? A lot of young first home buyers will want to start a family, and that can mean you may go onto one income for a period of time in which case you may want some flexibility with your loans.
- What plans do you have with the house? If you are planning some renovations or changes to the house then you may want some flexibility with the loans to enable you to focus on adding value and improving your home. Of course once those renovations or changes are complete you may want to change your focus to paying off the loans.
- If you expect any lump-sums from the sale of an asset, exit of an investment or inheritance then you need to consider these when establishing your loan structures.
- Is this home your forever home or is it just stepping stone to something else? Ultimately you want to be living in a nice freehold property, but that is normally going to take some time and effort. Your loan strategy will be very dependent on what your plans are.
Everyone will have different priorities, and this is why we say that one loan is never going to suit everyone.
Try asking your bank to explain the options, and they will probably just explain some of the features of the loan that they offer. Ask a mortgage adviser and they will be able to explain the options from a range of banks and non-bank lenders.
Make A Smarter Choice
I’ve always wondered why ;people will take weeks (or months) to look for a home, but then will take the home loan that the banker offers without questioning if it is suitable.
Most of the time people are so happy just to have their finance approved that they forget how important it is to get the best home loan.
A home loan could be your biggest ever financial commitment, so it deserves some time to make sure that you get it right.
It’s more important to have the best home loan than it is to get the lowest rates.
It’s a good idea to speak to an adviser who can arrange the best home loan for you, but you should also work with an adviser to ensure that your home loan is structured correctly and also to make sure that you get competitive home loan rates.