What are Interest Rates?
What are interest rates? Interest rates are a great start to determine how suitable a loan is, but isn't everything. An interest rate is an amount of money paid over a period of time proportionate to the amount of money lent or borrowed. Another way to look at interest rates is that they are the amount of money charged on top of the money you borrowed which is a percentage by the bank or lending company that gave you the loan.
The interest rates can change depending on the supply of lenders and banks and the demand from borrowers. The supply here is the capital available to be lent in banks and lending companies and the demand being people wanting to borrow that money for loans. Other factors that can affect interest rates are economic growth, inflation and government policies. Knowing what the current lender’s interest rates are in Australia will help you understand where the market is going and how to better plan for the future, as loans can span across multiple years you don’t to be caught with a variable interest rate payment method during a long rise in interest rates.
Despite the focus on interest rates, there are other important points to consider when deciding on your home loan. For example, if you’re a borrower with a lot of cash lying around, it might be a wise idea to consider taking out an offset account. Offset accounts reduce the interest paid on your loan if you keep cash in them, so for borrowers with extra cash, having a higher interest rate with an offset account might actually be better than a lower rate without it. The bottom line is choosing the combination of features, rate and lender that best suit you as an individual in your specific financial situation, and therein lies the value of a good mortgage broker. We can help you understand the details that you need to and to present you with the best options available for you, and tailor advice to your situation.
Information Disclaimer:
Any advice provided is general and does not take into account individual objectives, financial situation and needs. All individuals should consider whether the advice is suitable for them and their personal circumstances.
