Treat honeymoon offers with caution: Loan Market
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.