Simple home loan comparison saves $32K
Finding a home loan is one of the biggest financial decisions we make, but many people spend less time finding the right mortgage than on planning a holiday. Not doing the homework to find the right mortgage could cost thousands of dollars in extra interest over the life of the loan.
On a mortgage of $350,000 that is paid back over 25 years with monthly repayments and an interest rate of 6 per cent, the total amount repaid in interest is $326,516. If the interest rate is 5.5 per cent, the amount repaid in interest falls to $294,792, or a difference of $31,724 between the two interest rates.
However, the mortgage with the lowest interest rate may not necessarily be the best loan. Fees and charges can add thousands to the cost of a loan.
The comparison rate is based on a loan of $150,000 and a term of 25 years. It is a good attempt to capture the fees and charges of the loan and express those costs through the interest rate.
Source: Sydney Morning Herald