Finding the lowest interest rate is not at all that matters.

If you believe that the lowest home loan interest rate is the perfect rate, then you might be barking up the wrong tree. Each of us has our own opinion regarding mortgages. And in this age of high interest rates, a lot of experts suggest that the most practical and simplest way is to look for low interest home loans. Initially, that may sound quite easy and catchy, but there is more to take into consideration, such as:

• Your current life status – planning a family, starting out a business;
• How disciplined you are regarding financial management, and;
• Future projects and plans over the coming months or years – vacation, renovation, investments.

The truth is, deciding on a home loan is an important financial decision that one has to make. And to save yourself a huge amount of money, time and hassle, you need to thoroughly check your options and evaluate your needs. Looking at comparison rates is just the tip of the ice berg.

Let’s take an example. Dianne decided to rent for many years before purchasing. She chose to buy an investment property in the long run. When she got married and started her own family, she sold her flat so as to increase the deposit on her new home. Since she and her husband were eager to become parents, they opted for a home loan which includes a redraw facility. They paid more than they could afford into their mortgage so that when Dianne gives her work up, they would still have cash reserves. They could also plan a repayment holiday whenever Dianne decides to get back to work for another week or month. They’ve placed extra money into their home loan, and by doing this, they trimmed down the overall interest owed. They also prevented paying the tax that would have been included to these funds if they had been placed in a savings account.

Let’s take another example. Robert prefers to split his home loan on his inner west Sydney apartment. He decided to fix half of his mortgage amount, so he could be sure what his repayments would be for the next three years, and he chose a variable rate for the other half. An offset facility is included in his variable rate loan. What Robert did is he banked his monthly income into his offset account, and by using his credit card to pay for his daily expenses and paying off his credit card debt in full each month using his offset account, he has saved an interest of around $10,000 on his loan in the last three years.