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There's a lot of competition for Australia's $ 1.3 trillion home loan market and one could be easy to be dazzled or confused by the variety of offers available.
Indeed, some of the deals might sound more like those on offer from car dealers than the banks, but that's what happens interest rates are low and every lender is keen to grab a share of the market.
Home loan cash back offers
In recent times, the deals have included cash discounts, $ 1000 gift cards to help with moving costs, cash rebates, holidays and even petrol discounts from one non-bank lender. A recent report by JP Morgan found that all the major banks were enticing borrowers with home loan rate discounts, with especially generous deals being offered to wealthy borrowers.
"There's been a huge spike in the number of lenders offering cash back sweeteners to borrowers, especially refinancers," said Kirsty Lamont of Mozo, the interest rate comparison website. "With interest rates so low, banks are having to find other levers to pull."
However, Canstar research analyst, Mitchell Watson, warned buyers to not be taken in by these types of incentives and suggests you would be wiser to focus on who offered the lowest interest rates and most flexible loans. "While $ 1000 will help you now, a lower rate will help you over the next 5 to 15 years," he said. Wise words, indeed.
How to stay one step ahead
Overall, the combination of low interest rates on offer and lenders keen to secure your business has to be positive for anyone thinking about buying a property in the near future. Nevertheless, there are some important points that require your attention:
The interest rate isn't the only key comparison figure, the 'comparison rate' based on $ 150,000 / over 25 years includes fees and charges, so provides a more valid comparison with other lenders.
Always shop around and speak to the smaller lenders as well as the big banks – they may offer more competitive rates.
Remember, if you are able to negotiate a lower rate, it could save you many thousands of dollars down the track.
Ultimately, there's no one-stop-shop solution. In fact, there's no substitute for doing your homework to make sure you find the right lender for you. Lenders are keen to do business, so take your time and don't feel pressured – get it right and you could reap the financial rewards for decades. That's where we can leverage our relationships and industry knowledge to bring you the best home loan deal tailored to your needs – simply call us and we do the rest.