How to compare interest-only mortgages
Every borrower wants the best mortgage. Here’s what you need to do to find the best interest-only loan for you:
- Compare and get a low rate mortgage. Every borrower benefits from a more competitive interest rate because it makes your repayments lower. Of course, it’s not the only factor you need to focus on, but the best interest-only mortgage for you has a rate that’s lower than most.
- Find a loan with the right features. What features you need in an interest-only mortgage depend on your goals and strategy. For example, if you have extra cash lying around (or some savings), you can use a 100% offset account to save on interest charges. However, suppose you’re an investor, and you have an owner-occupier mortgage as well. In that case, you may want to keep your money there instead (because interest on investment loans is tax-deductible). In addition, some borrowers benefit from extra repayments, allowing them to repay their mortgage faster.
- Add up the fees. Some mortgages slug you with monthly costs, which can add up to a few hundred dollars a year. Others come with a hefty one-off application charge, while others have no fees at all. So, if you can avoid fees, why not avoid them? Well, if there’s a better mortgage for you with a $200 fee attached, it could still be a more beneficial deal than a worse mortgage with no fee. Compare the entire mortgage, not just the charges.