At the time of writing the Commonwealth Bank offers a standard variable mortgage interest rate of 6.4%. Alternately, they are offering 4.99% fixed for two years, 5.29% over three years and 5.69% over five years; all plus a $600 one-off fee to be able to accept you as a customer.
How can you predict or understand which is going to be the best deal for you over the short term and over the longer term, without speaking to your mortgage brokers in Rockingham to find out all of the implications of accepting one of these deals?
Fortunately, your professional mortgage broker will also be able to look at other banks and home loans providers to see what other deals are available for you and discuss each by looking at their advantages and disadvantages.
Which is The Higher Rate?
You can use a comparison website to compare the deals, to see how much you will pay over the long term. Unfortunately, you will probably move home in the future so any comparison is only really valid for the period that you intend to keep the mortgage at the same level and without changing to another lender for another, better deal.
To give you a relatively simple example; if you have borrowed $350,000 as a mortgage on your home and were paying a standard interest rate of 6.99%, which you then refinanced to a deal fixed at 5.99%, you will be saving just over $59,000 over the life of your loan, providing that the rates don’t ever change again, which in practice, they will.
Mortgage lenders will only offer you a fixed-rate deal that they believe will still bring them a handsome profit over the term of the fixed-rate. You might be able to outsmart the lending market occasionally, but the banks will be the biggest winners. This is why you should take a meeting with your mortgage brokers in Rockingham because they are more up-to-date with the ever-changing plans and schemes in the marketplace and can help you ensure the best financing is in place for you.
Must You Know What You’re Going to Pay?
For many people who have struggled with their finances during the recession, knowing exactly what you’re going to pay each month with a fixed-interest rate mortgage can give you the peace of mind and satisfaction in helping you plan your finances.
Nevertheless, if you were paying one of the higher fixed-rate deals when the mortgage rates fell a considerable way, you would have wished you’d been on a standard variable interest rate deal.
For the people that refinanced into the choice of fixed-rate loans during March, they could not guess that the Reserve Bank would cut the cash rate by half a percent on May 1, perhaps making standard variable interest rates a more favoured option.
Most people don’t have access to the information of what’s going on in the finance market and particularly in relation to mortgages, which is why you should seek the advice of your mortgage brokers in Baldivis to they can give you comparisons of variable rates or fixed rates and give indications of what they believe is going to happen during the next 2 to 3 years.
When you are comparing your figures, it’s not just the savings or differences per month that will affect you over the long term; it could be the payments over 20 to 30 years where you might save tens of thousands of dollars.