Home Loan Interest Rate
The biggest factor that makes the difference between categories and offers is the interest rate. This element alone influences the monthly costs in the repayment schedule, which means that the tiniest rise in the interest rate will take more money out of your bank account. The interest rate can be fixed, variable or a combination of these two. There are lenders that even provide 'introductory' rates that are smaller for the first period of repayment. The variable interest rate poses no restrictions in case of additional payments, and this is probably the biggest advantage it provides. Plus, if the cash rate drops, so will the interest rate. Unfortunately, increases of the interest rate can occur both in relation with a cash rate or independent of it. The more rewarding situation from this perspective is the fixed interest rate, which remains locked at the same level for up to five years. You thus have the chance to better plan your finances because you know exactly what you are going to pay every month. With a fixed interest rate, you cannot take advantage of the rate decrease, plus, there may be restrictions in case you want to make a repayment in advance.

As for the introductory interest rate, lenders keep it very low for one or two years. The bad part is that such interest rates come with restrictions such as high termination fees, plus, the interest rate may be very high at the end of the introductory period. Mention must be made that any comparison between loan offers is difficult or almost impossible given the difference in the interest rate and the existence or absence of additional fees. Therefore, lenders must provide a 'comparison rate' which represents the interest rate together with all the fees and charges. For instance, a certain may have an interest rate of 8.0% but a comparison rate of 8.5% due to supplementary charges. For a full picture of the loan offer, it is important to consider the rest of the features too, besides the interest rate. Do not neglect to carefully check the termination fees, because they can give you a very nasty surprise. A cheap loan will no longer be cheap if you have to pay a huge sum of money just to terminate it sooner. 2% for early termination is quite a lot if you finish before the scheduled term, this means that you'll make no savings despite the low comparison rate.