3 minute read
WHY INTEREST RATES AREN’T EVERYTHING
In the rapidly changing interest rate environment that we are currently living in, we encourage you to dig a little bit deeper into what you really want from your loan and what is most important to you over a longer term.
Some of the most common things we hear when we speak to our clients about their loans are, “What’s the interest rate?” and, “I’m just chasing the lowest rate.” At the moment, interest rates are changing from one day to the next, and it doesn’t look like that’s going to be slowing down any time soon! So, if you are just after the lowest interest rate, it’s likely that the lender you choose now may not be the cheapest in a few months’ time. That’s why it’s so important to consider other components of your loan. Consider the following:
ADVERTORIAL
ONGOING FEES
Sure, the rate might look cheap, but if you’re paying an annual or quarterly fee, then what is the real cost to you?
THE SERVICE OFFERED BY A LENDER
There’s nothing worse than sitting on hold to a call centre for hours to ask a question about your loan. Or waiting for days on end to receive an updated loan statement. So maybe having your own dedicated relationship manager to look after all of this for you could be worth its weight in gold!
THE STRUCTURE OF YOUR LOAN
Just because the interest looks cheap, doesn’t mean it’s necessarily the most cost-effective option. A home loan without an offset account may mean that you are paying more interest over the life of the loan, or a commercial loan with a shorter term may mean that you end up with larger monthly repayments which impact your business cashflow.
YOUR FUTURE PLANS
For example, if you know you are planning to sell your property within the next year, opting for a 2-year fixed interest rate could be costly to you, even if the rate on offer is the lowest option at the time, due to potential break costs and early repayment fees. Another example could be if you are planning to take extended leave (going back to study, having a baby, for example) and so having stability over your repayments while your income is going to reduce is important to you. In this scenario, choosing a fixed rate so that you have a set rate and repayment while your income is going to vary might be more suitable to you than taking a variable rate loan. Although the variable rate might be the lowest on offer at the time, you have to consider how much the rate might fluctuate and if you could afford the higher repayments moving forward. So as you can see, there really is a lot more to consider when choosing a loan than just the interest rate! The team at Credabl has access to a variety of different options and we pride ourselves on finding the best solution for your individual circumstances.
Whether you’re new to seeking finance or ready for a review, we’re available to chat live on our website credabl.com.au or you can call Ali G, Ali J or Deb in the WA team any time on 08 6280 1255, we’d be happy to help!
This article is a guide only and does not constitute any recommendation on behalf of Credabl Pty Ltd (ACN 615 968 100) or any of its related bodies corporate (Credabl). The information in this article is general in nature and we have not considered your personal objectives or financial circumstances or needs when preparing it. Before acting on this information you should consider if it is suitable for your personal circumstances. Credabl is not offering financial, tax or legal advice. You should obtain independent financial, tax and legal advice as appropriate.
