How to bring down your home loan costs even as property prices go up
Finding a top home loan has never been more important, as the 'asking prices' for houses in major cities such as Sydney appear to be rising.
The asking price for a three bedroom house in Sydney for the week ending January 30 was up 21%, according to recent data from SQM Research.
This puts the asking price at about $1.7m.
This represents a significant jump, especially given that units only moved up 1.4% to an asking price of $791,121 in the same week.
SQM crunches the data on this weekly basis to try and offer a more timely read of the selling market. This can be useful for those considering buying a specific size of home.
For example, two bedroom units are rather popular in major cities such as Melbourne and Sydney. The asking price on two bedroom units in Sydney at the end of January was about $860,259, as per SQM’s data.
This can be broken down further by various city regions, such as the eastern suburbs of Sydney where the asking price on a two bedroom unit was an incredible $1.2m at the end of January. Meanwhile, a two bedroom unit in Parramatta was going for just $601,000 over the same week.
A simple comparison like this only highlights the importance of looking at a few different suburbs within a given city because the laws of supply and demand can be applied to any given area – and are changeable over time.
Prices one thing, home loan rates another
This type of property review also shows a prospective buyer that the size of your home loan - and indeed your first deposit - can vary greatly when considering different housing types.
For example, if your goal is to simply get onto the property ladder, then a smaller apartment in a suburb with a good supply of units is surely going to help you bring down the cost of your home loan.
If, for instance, you were to buy a unit in the Liverpool area of Sydney, you’d be looking at around $625,000 asking price, as per SQM. Let’s say you make a (20%) first deposit of $12,500 on that property – you would then require a home loan of about $612,500.
The average variable home loan rate is currently 6.85% p.a. in the Mozo database, so monthly repayments on this amount over 25 years would be $4,271.
However, you could bring your costs down quite a bit just by shopping around for a better home loan rate. Say you were able to secure 6% p.a., you could reduce your monthly repayments to $3,846.
Clearly it’s well worth the effort doing some basic home loan comparisons!
Home loan comparisons on Mozo
-
Fixed Home Loan
- Owner Occupier
- Principal & Interest
- LVR <95%
Go to site- Interest rate
-
5.69
%
p.a.
Fixed 3 years
- Comparison rate
-
6.28
%
p.a.
- Initial monthly repayment
-
$4,174
Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.
- interest rate
-
1 year - 6.19% p.a. (6.45% p.a.*)
2 years - 5.69% p.a. (6.34% p.a.*)
3 years - 5.69% p.a. (6.28% p.a.*)
4 years - 5.89% p.a. (6.30% p.a.*)
5 years - 5.89% p.a. (6.27% p.a.*)
- Fixed loan revert rate
-
6.34% p.a.
- Upfront fees
-
$799
- Ongoing fees
-
$6.00 monthly
- Discharge Fee
-
$350.00
- Package
-
-
- Maximum loan to value ratio
-
95.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$5,000,000
- type of mortgage
-
Fixed
- Repayment types
-
Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
$4,174
- Extra repayments
-
yes - free up to 1 year in advance
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
- Split account
-
yes
- Other restrictions
-
Monthly fee only applies to fixed period of loan.
- Other benefits
-
-
- Special Offers
-
$4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
Read reviews and learn more about IMB Bank home loans
Go to site
Your selected home loans
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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