Yahoo Finance Revealed: The best mortgage deals available right now
Nicole has done the leg work for you to come up with today’s best-value mortgage deals which will help you pay off your mortgage faster, cheaper and easier.
This is part two of a two-part series on how to make like a mortgage broker. Read part one here on how to identify the real best deals, so you can spot them not just today but every day.
Here – due to popular request – is how I determine the best mortgages and you can use the same method yourself.
Given there aren’t any comparison websites which let you filter by the best mortgage deals, I take the following five steps to make my own comparison and come up with the top runners.
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Step 1: Look at variable rates – Fixed rates can be good but right now they are far more expensive than their variable counterparts.
Step 2: Make sure the offset is real – Just about every lender claims to carry offset accounts… but only a mortgage issued by an authorised deposit-taking institution (ADI) can carry a real offset account. The rest are fakes… and they’re dangerous.
Step 3: Compare discounts with discounts – Different loan sizes and borrowing percentages attract different discounts, especially with the big four banks. You need to find the exact rates for your circumstances.
Step 4: Check the fees – You’ll pay extra, even as a higher interest rate, for offset accounts. But if you work them well, they will save you a fortune and shave years off your loan time.
Step 5: Cull your list by comparison rate – This formula lets you skip the above step as it gives you the interest rate adjusted for your up-front and ongoing costs. It’s the true cost.
You can read the details of my steps to pinpoint the truly best home loans in part one of this series: How to identify the real best deals.
Meanwhile, I have made the five-step request of a comparison website on your behalf… and can list today’s best loans in the land.
But why only the best-value variable rate loans, and not the cheapest?
Let me be clear: you want the best-value mortgage, not a cheap-and-cheerful one because ultimately, that latter one will cost you.
It could carry a fake offset account that sees your over-payments sucked up in a cynical move designed to protect your lender, with no regard for you.
This could happen if, a) you get into financial strife and are unable to pay anything and/or b) the lender just deems it, usually because it has made a miscalculation along the track of what you owe (this has actually happened).
The more strategic reason for finding and using a genuine offset account is that any repayments you make directly into a mortgage will get onto the Australian Taxation Office (ATO) radar and could cut you out of tax deductions.
This would apply if you ever wanted to turn your now-home into an investment property because you can only ever claim interest deductions on your lowest-ever loan balance.
After all, you never know where life will take you. You might find you need to upsize to fit your family which might see you unexpectedly needing to rent out your original home.
So to the best deals…
The best-value variable rate loans, revealed
Below are the top results today from the criteria I have developed and honed from more than 20 years with and writing about mortgages.
(If you are reading this because you want to cut your repayments by refinancing, you will have to be as strategic in your advanced preparation and application as I was… that’s a subject for another column).
I asked Mozo for two loan lists: One is for the best-value loans from all the ADIs and the other is the big four rates, across different loan-to-value (LVR) ratios. Remember, to some extent, they are disclosing discounts now for particular circumstances.
And please note that all the rates below are likely to go up by 25 basis points in the coming weeks or sooner.
So you can see that Commonwealth Bank’s rate, now it’s come clean with the discounts, are sharp, ranging from 5.07 per cent for a loan up to 60 per cent LVR, to 5.74 per cent if you borrow 90 per cent.
Don’t miss that the fees push the comparison rate up a fair bit though – and it’s that you should use to compare a potential loan with other institutions.
So, how do the smaller lenders stack up?
They’re much cheaper…
The thing is that if you get into the right loan in the first place, you will be able to pay it off faster, cheaper and easier.
And that’s the mortgage masterstroke.
Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.
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