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Getting Started | Before You Build | Choosing The Finance | Home Loans | Home Loan Increase | Investment Property
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Why the interest rate is not the only thing you should look at

Choosing the right finance can be a daunting task. With so many different financing options and lenders, it's easy to fall into the trap of looking no further than the lowest interest rate. The reason it's a trap is simple. The lowest rate doesn't necessarily give you the best loan. In fact, it could leave you paying more than you need to.

When it does come time to compare interest rates make sure you're getting a fair comparison.

The Annual Percentage Rate (APR) is the rate you'll usually see advertised. However, if you are comparing this to another rate, make sure you take into account other costs that may not be included in the calculation. For example, loan application and management fees.

A loan's features and flexibility can make thousands of dollars difference in the long run. So, while you always want a competitive rate, make sure you've checked the loan's other features first.

Home Equity Loans

Your 'equity' is the value of your property, less the money you still owe on your loan. For example, if you have a property worth $200,000 and the outstanding balance on your loan is $146,000 the equity you have is $200,000-$146,000 = $54,000 or 27% ($54,000/$200,0000). And as the value of your property increases, so does your equity - regardless of your loan balance.

Home equity loans allow you to tap into your equity with the funds secured against your home. This provides you with a 'line of credit', which provide you with finance, which you can access whenever needed. You can use these funds for almost anything, from adding to the value of your home with renovations, to paying for your children's education.

The advantage of a Home Equity Loan is that the rate is usually lower than other types of personal loans. You can usually borrow up to 75% of your home's value, depending on the amount of equity you have. Access to these funds is usually by chequebook, with interest charged only on the funds you use. The balance of the funds approved are then available to you when you need it.


Getting Started | Before You Build | Choosing The Finance | Home Loans | Home Loan Increase | Investment Property
page 1 of 1