There are numerous features that accompany the cheap home loans and determine the amount or the cost you will have to pay in clearing the loans. It is very wrong to solely judge a loan according to its interest rate and the application fees. The first feature that will make your loan cheap is the extra repayment feature. Most of the fixed interest loans will restrict you to a limit which you can pay without being charged the break costs. It is advisable that you always pay an extra ten percent in every installment so that you can cushion yourself from defaulting and paying break costs if you settle the cheap home loans earlier than prescribed.
You should also check on the redraw facility offered by the mortgage company in terms of mode of application, lead time needed and the costs that come along. Redraw facility is the ability to draw or access the extra ten percent you pay on top of the agreed monthly installments amount. This amount is advantageous for can act as a saving or security and a way to evade taxation on your savings as it is tucked in the mortgage which is tax deductable.
Some cheap home loans come with repayment holidays. You can apply for the repayment holiday if you are financially stretched resulting from occurrences as job loss, arrival of a baby and many others. Most of these repayment holidays can go up to six months. Unfortunately, you must have being paying the extra ten percent repayments to qualify; the extra collected amount with stand in for those months that you want relieved.
Due to the stiff competition in the finance world many lenders are augmenting their cheap home loans packages with different benefits as exemption of some charges, discounting interest rates and many others that are aimed at keep you for future business.
Another feature you need to cross check is the mortgage offset account. Some banks many encourage you to open other accounts that earn interest which is used to offset the interest on your cheap home loans. Here you do not receive any money in terms of interest but the amount earned in translated into the interest you could have paid for your loan. The only trick here is that you should make sure that your offset account earns more interest that what you are paying for the loan. In a financial perspective the bank is further squeezing more from you because the amount you deposit in the offset account will be used by the bank to generate more revenue where as you gain little.
