Warning on Cheap Deals
Borrowers are being warned not to be lured in by home loan deals that offer significant interest rate discounts. In many cases, the full costs of the loan aren’t revealed. “They are attracted to these introductory rate home loans because they appear to be the cheaper option to get your foot through the door of the property market,” said Michelle Hutchison from RateCity.
Borrowers need to be careful because after one year the interest rate often reverts to a higher rate, and over the next 25 or 30 years, you could end up spending more. Though higher interest rates applied to standard and basic home loans, it ends up being the more cost-effective loan option for borrowers, rather than opting for intro-rate deals that seem too good to be true (and probably are). Experts are warning homebuyers not to get carried away with amazing rates and deals.