- Posted 06 Jan
- 0 Comments
If you’re looking to purchase new property in the New Year, you’ll likely be wondering where you should start your research.
If you’re just getting started, an online comparison site is a good place to start, but what you’ll find is that they focus mainly on the best interest rates, rather than providing you with information about the full terms of the loan.
So while utilising a comparison site in your home loan research, there are some things to keep in mind as you browse these sites.
#1: Understand how they make their money
As you’re browsing these comparison sites, it’s important that you understand how they make their money. Remember, they are a business first and foremost and they need to make a profit… so how are they doing this?
One of the key ways that comparison sites make money is through advertising. They may also make commission from the lenders they provide, which is perfectly normal and a legitimate way to make money.
Where it can get tricky and what you need to be aware of is that some of these sites may charge a lender to be featured on their site. This means that the lender may not be at the top of the board just on merit alone, they might have paid to be there.
Think about the lenders they are comparing and consider which lenders are not shown there and consider why they are not shown. Hint: they may not have paid to be there!
Online comparison sites are regulated by the ASIC (Australian Securities and Investments Commission), with a focus on ensuring that they provide as much clear information as possible when providing rankings and ratings.
#2: Check comparison rates shown
Part of the ASIC regulations state that a comparison site must show a loan’s comparison rate. This is basically the true cost of a loan, including most of the fees and charges.
A comparison rate is often shown as a percentage and you should be considering this in conjunction with the interest rate and loan features, such as flexibility, redraw accounts and online banking facilities.
#3: Use multiple sources in your research
The best way to avoid getting ripped off is to make sure that you use multiple sites to conduct your research. While this might appear an obvious statement, you want to make sure you’re not basing your final home loan decision on just a comparison site alone.
Remember, there are many factors that go into what makes a home loan a good option for you, including your actual borrowing power and whether a lender will even approve you.
An online comparison site is a great place to begin your research, but you should follow that through with additional and more in-depth research once you’ve got a short-list of options.
Some options to consider regarding further research include:
- Looking to social media for recommendations
- Chatting with local real estate agents about what they recommend
- Utilising a mortgage broker to find the best deal
The bottom line is, that online comparison sites are a good place to start your home loan research, but you shouldn’t stop there. Consider all options and do your due diligence to ensure you find the best loan for your specific needs.
If you’re ready to do some further in-depth research, chat to one of our home loan consultants today and find out how Australian Credit and Finance can help you with your mortgage needs.