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You should recognise Interest rates for what they are, just the price point of the market.
There is so much noise about interest rates because lenders know its their main driving marketing tool.
Lenders use them to get you in the door – once in they then steer you into something that fits them, which may not be the best available product on the market for you.
First and foremost, you should confirm you fit into the banks lending policy and criteria. There is no point chasing a fantastic 3 year fixed interest rate, for example, if you’re never going to get approved by the lender.
Looking at the best policy is the key.
Everyone has completely different circumstances, different financials, certain twists and turns in their life story.
So finding a bank that fits your story is the most important step to take first.
That’s why it’s so important to start off knowing where to go rather than just going to the best interest rate on offer.
The next step is simple – before talking about price (interest rate) you should know what product Is best for you.
It sounds obvious but for some reason people are so fixated on Interest rates they don’t look at the actual product they are purchasing when it comes to lending. It’s really quite bizarre when you consider a home purchase as the single biggest investment in most people’s lives.
Banks know that there are so many different products that it becomes so confusing for people.
They use interest rates to push people into a the product that suits them even though it may not actually be the best product available on the market for you. Have you ever hear a bank say “you should go next door, they have a much better loan than us.”
Once you know the lenders who fit your scenario and you know what product you need, then you can literally compare apples with apples and THEN make a choice based on price, that being interest rates and ongoing fees.
Remember:
The right policy – limits the risk of decline.
The right product – can save you thousands.
Be careful not to get sucked in by a slightly cheaper interest rate if it’s not the same product.
As example the correct use of an offset account can save you much more than a small reduction in the interest rate on offer.
Also, be aware that lenders use tricks like Honeymoon rates that give you a great rate for the first period of your loan but they don’t come with added extras that again could save you heaps more money in the long term.
Generally speaking most people are so caught up in the emotion of a property purchase that they don’t look at their loan as a product they are purchasing.
Here is a tip: treat applying for a property loan just like you would buying a car.
Most people don’t just go out and buy any car just because it’s cheap – in fact most people would be suspicious of a really cheap car. Because there could be something wrong with it.
When you are looking to buy a car you generally know what type of car you need. What type suits you. You then look a the brands and compare the different features like safety bags, sound systems, etc.
Then you would make a decision about the best price on offer.
With a loan – find the best lenders that suits you, then compare the products they offer and then make a decision on the price (interest rate) for you and the investment.
The best advice is to be aware and informed of what is available and if it’s right for you.
Need more personalised information on your situation Call Me on 1300 INK 000 (1300 465 000).
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The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of an Ink Wealth Pty Ltd advisor before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Ink Wealth Pty Ltd nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
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Katherine Therese Euers is a Credit Representative (497712) of Vow Financial Pty Ltd, ABN/ACN 66 138 789 161, Australian Credit Licence 390261