Be Aware of Application Fees
Just because two loans may seem to have almost identical interest rates, this doesnt mean you can assume youre getting roughly the same deal. Many banks will market a loan for its seemingly low interest rates, but then surprise you with an exorbitant establishment and application fee when the time comes to apply for the loan, By this time youve usually had pre-approval which means youve probably put an offer in on the house, and it can often be too late to pull out. If youre considering a short-term sale on the property a big application fee can be particularly crippling, because you outlay money you otherwise wouldve saved just to get a low interest-rate which doesnt end up making too much difference anyway.
Fixed or Variable?
One of the most important things to decide on when purchasing a loan is whether or not to choose a fixed or variable interest rate. A fixed interest rate stays the same throughout the duration of the loan, but because you are paying for security it is usually set slightly higher. A variable rate, on the other hand, is often lower, but if national interest rates rise, so will the interest on your loan and you could be stuck paying far more than youd expected.
The fact is, not even two identical loans from the same bank are created equal. While the product may be the same in name, there is a lot of wiggle room for the right customer to bargain his or her way into a better deal, particularly when it comes to a property investment. Because the bank knows that you are investing in something which will in all likelihood make you money, theyll be keen to keep your business, which puts you in a good bargaining position.