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 all 15 basic variable rate products from banks and 24 products from the non-bank lenders in our books by taking into account each and every fee, including upfront, ongoing and deferred establishment fees as at 21 April 2010.
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 and interest (P&I), we calculate the true cost of a mortgage over three, five and 10 years. This month, we based or calculation on a loan amount of $300,000 at 80% LVR taken over 30 years.
And the winner is…
ING Mortgage Simplifier >$300K took the pole position as the best value basic variable loan in the bank category.
Boasting the lowest interest among the banks’ offering of just 6.43%, the ING product also comes with no ongoing fees attached. While the loan carries the highest upfront cost among the top ranking bank products, it has a competitive exit fee of just $600 if you break your loan within three years.
Notwithstanding the large upfront fees, the ING Mortgage Simplifier>$300K still poised to save you $1,139 during the first three years of your loan, $2,064 over five years and $4,335 over 10 years compared to the average loan in our books.
Multi-award winner Reduce Home Loans basic variable loan took the top spot for the best value basic variable loans in the non bank category.
Like the ING product, Reduce Home Loan offers the cheapest
interest rates of just 6.09% of all top ranking bank products. Its entry cost of $520 is not the cheapest, but still one of the most competitive. The loan carries an ongoing fee of $28 per month and an exit fee of $1,067.
Despite these cost, the loan is still significantly cheaper than the average loan in our books. Over three years, the Reduce Home Loan basic variable loan could save you $3,042, over five years, savings goes up to $4,196 and a massive $8,919 as the exit fee drops to zero.
Read the full result in the current issue of Your Mortgage magazine out on sale now!