While the comparison rate can be a useful tool, Your Mortgage has gone even further and developed its own method to uncover the true cost of a mortgage. The team at Your Mortgage has worked out the 'true cost' of the 23 introductory loan products from banks and 36 products from non-bank lenders in our books, by taking into account each and every fee, including upfront, ongoing and deferred establishment fees, as at 25 June 2008.
By working out how much a given loan will cost you after a range of time periods - three, five and 10 years - we show you the impact that these fees can have on the total cost of your mortgage. By adding all fees to the cost of principal & interest (P&I), we calculate the true cost of a mortgage over three, five and 10 years. This month, we have based our calculation on a loan amount of $300,000 at 80% LVR taken over 30 years.
And the winner is...
The Editor's Choice award for the best value introductory loan in the bank category in Australia goes to NAB's Introductory 3 year variable rate loan.
With interest rates set initially at an attractive 8.66%, the loan comes out $2,465 cheaper compared to the average cost of the average loan in our books if you hold it past the three-year mark. After 36 months, interest rate reverts to the bank's SVR, which is set at 9.46%.
Economy Home Loans' 5 Year Honeymoon Rate Loan has won the top spot for best introductory loan in the non-bank category, thanks to its competitive interest rates.
The initial interest rate is set at 8.65% for five years and then it reverts to an even lower 8.55% after the intro period. Compared to the average cost of an average loan in our database, the Economy 5 Year Honeymoon Rate Loan comes out $4,620 cheaper after five years.
Even with total upfront fee of $1,140 and exit fee of $350, borrowers can still save $12,343 over 10 years compared to the average loan in the same category.
For the complete list of top-ranking basic variable rate products, read the latest issue of Your Mortgage magazine, on sale now.
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