Treat hon­ey­moon of­fers with cau­tion: Loan Mar­ket

The Riverine Herald - Local Real Estate - - LOCALREALESTATE.COM.AU -

Home loan cus­tomers should be wary of lenders of­fer­ing in­ter­est rates sig­nif­i­cantly be­low the stan­dard vari­able rate, ac­cord­ing to mort­gage bro­ker Loan Mar­ket. Loan Mar­ket cor­po­rate spokesman Paul Smith said con­sumers seek­ing the most com­pet­i­tive home loan prod­uct should check the com­par­i­son rate, but more im­por­tantly eval­u­ate the over­all cost of the loan com­pared to their in­di­vid­ual cir­cum­stances. Mr Smith said in the cur­rent highly com­pet­i­tive lend­ing en­vi­ron­ment there were lenders ad­ver­tis­ing vari­able rates 1-1.5 per cent lower than most bank stan­dard vari­able rates. ‘‘Con­sumers need to tread care­fully though as these rates may have hon­ey­moon pe­ri­ods and it is usu­ally not a true barom­e­ter to mea­sure the cost of the loan over its life­time,’’ he said. ‘‘By law, each ad­ver­tised in­ter­est rate must show a com­par­i­son rate along­side any time credit that is ad­ver­tised. ‘‘While the com­par­i­son rate pro­vided along­side any ad­ver­tised rate at­tempts to weigh one prod­uct against an­other in a trans­par­ent and even-handed man­ner, it too can have short­com­ings.’’ Mr Smith said a good place for a con­sumer to re­ceive ex­pert guid­ance was from a mort­gage bro­ker.

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