Time Is Money
The Age
Wednesday December 11, 2002
When it comes to your mortgage, time is money. A disciplined borrower can save money by setting goals to a realistic time frame for their loan.
The experts advise that borrowers should consider the following strategies:
• Pay sooner rather than later
Managing a home loan is as much about money as timing. Staying ahead means not only paying your instalments when they are due, but ahead of time. Some lenders will let you pay your first instalment a month after settlement. There is no harm in getting in early, if you can afford it. That way, you will stay ahead on your repayments and have added flexibility should you later need to delay a payment.
• Take the time to shop around
Don't rush into things. The home loan market is littered with options from both bank and non-bank lenders. Call at least half a dozen lenders before you start talking seriously to your first choice. Also, whether you are looking for a new loan or to refinance, make the most of the Internet as a research tool for comparing products.
(Try www.interestrate.com.au)
• Suit yourself
Knowing what you want means doing some research. Make a list of features you will use, then rank them according to importance. Include any extra costs associated with these features and see if that changes your ranking. Look at potential home loans on the Internet to see how they match up to your requirements. Remember, there is no point paying for features you are not going to use.
• Consider alternative lenders
There is more to the mortgage market than the big banks. Don't forget to consider smaller bank and non-bank lenders, as they can offer competitive products and packages. Lenders like Collins Securities and FAI Home Loans, for example, may not be household names, but they are established lenders in the market.
• Pay up front
If you are not required to pay fees and charges up front, you may end up
paying interest for the privilege. Your mortgage fees and charges are added to
your home loan and, as a result, you are paying interest on more than just the
amount borrowed. It is wise to take the additional charges into account and pay
them off early.
Top basic variable home loans**
Banks
Lender Product True rate Lender
Total Ongoing Exit
name AAPR* rate upfront fees
fees fee
ING Bank Home Loan Saver 5.98% 5.95% $499
Nil $100
HomeSide Lending Plain and Simple P+I 6.02% 6.00% $400
Nil $300
ANZ Bank Money Saver Home Loan 6.05% 5.97% $600
$8/month $90
Bank of Melbourne First Option Home Loan 6.07% 5.99% $600
$8/month $125
Westpac First Option Home Loan 6.07% 5.99% $600
$8/month $135
Non-banks
Lender Product True rate Lender
Total Ongoing Exit
name AAPR* rate upfront fees
fees fee
Wizard Mortgage Corp Rate Breaker Loan 5.44% 5.39% $760
Nil $785
Homeloans Ltd Home Truth Loan 5.48% 5.40% $1180
Nil $315
Heritage B. Society Variable Options Loan 5.91% 5.85% $647.50
$5/month $150
IMB Limited IMB Budget Home Loan 6.03% 5.95% $595
$8/month $200
FAI Home Loans RMT More Value Loan 6.08% 6.05% $499
Nil No
* AAPR is the annualised percentage rate - the rate after extra fees and charges
are taken into account.
** Rates are for loans of $176 000 to $275 000 in Victoria for owner-occupied
homes.
Compiled by www.interestrate.com.au using Cannex data (December 4).
© 2002 The Age