As millions of consumers need homeowner loans to make it through the various difficult economic circumstances, it can be very handy to know how to compare them. Assuming that you are able to qualify for at least some types of loans, here are several areas to compare as you stack one against the another:
- First off, it is important to understand that there are many different homeowner loans available. That is, an institution such as your local bank has several types of products, so do not assume that all are on the same terms even if the amount is the same. Thus, you will need to compare even within one given company.
- The first factor to examine is the interest rate. Is it fixed rate or variable? Does it change after one year? Some very popular loans on the market offer a 0% rate for one year, then up to 10% or more every year after. This can make a difference of thousands of pounds on your loan. As for fixed rate and variable rate, it depends on the economy and your tolerance for risk-taking. If the economy is going through a period of very low interest rates, then a variable rate might be acceptable over a short term. If the economy strengthens and stabilizes, a fixed rate is usually preferable. That way it will not balloon if/when interest rates surge.
- As you compare rates and terms, always keep in mind that even a small increase in interest rate can mean a very different payment for you from month to month. That’s why it pays to shop around patiently and find out about the details before signing.
- Don’t be sucked in by the initial savings created by 0% interest rates over the first year. Lenders know that this is a great way to rush you into a decision on a homeowner loan. It might be more prudent to opt for a higher fixed rate, than a 0% introductory rate followed by double-digit interest. For instance a fixed-rate loan of 5% over five years is superior to a 0% introductory rate followed by a 10% rate thereafter. The total savings on a five-year £10,000 loan will be £500. These differences mushroom as you look at larger loans over longer periods of time.
- Check and see if you have any tax savings coming your way with your loan. Home equity loans and lines of credit have potential tax savings as you deduct interest paid on them. Don’t neglect this additional benefit as you compare homeowner loans.
- If you don’t want to spend the time doing the math and calculating your payments based on variable interest rates, etc, ask the lender for a figure of how much total interest will be paid over the time of the loan. This can speed your comparison shopping immensely.
Before submitting your loan application, be sure to compare deals on the bases of interest rates, monthly payments, types of rates and potential tax benefits. Even if you think you should jump at the first offer because you are not confident of other approvals, don’t be so sure. Take your time and compare potentials savings; the few hours you invest could save you hundreds, if not thousands of pounds, an excellent investment of your time. If you want to start out by getting a quote from Apple Loans, you can click here to sign up for a Homeowner loans quote.