How much difference does interest rate make?
Borrowing money from bank to purchase a home means you have cash in your hand to buy it but you have to pay back the money along with the interest. The interest accumulates on the principle amount thus it is important to consider the interest rate.
Before applying for home loans Australia, make sure to compare the home loans. Different lenders offer home loans at different interest rates and even a slight variation in interest rates can make a huge difference of dollars.
For instance, you want to borrow $500,000 as a home loan for 25 years at interest rates of 3.75% p.a. and 4.00% p.a. After calculations, you will see that the 0.25% p.a. the lower interest rate can save more than $20,000 across the 25-year loan term.
Needless to say, a higher or lower interest rate could affect the mortgage repayments. Therefore, it is imperative to find the home loan at the best possible interest rate.