Buying your first home or property is a massive investment. The costs involved mean that most buyers, particularly first-time buyers, are required to take out a loan.
A mortgage is a specific loan that is designed for buying property, otherwise known as a home loan. There are two aspects to every mortgage that are universal. A mortgage is a secured loan, which means that the borrower has to offer collateral if they can’t pay the loan. In this case, the collateral would be your home. Also, a mortgage typically comes with an interest rate, meaning that you will pay slightly more than you borrowed over time.
Most mortgages in Australia last for 30 years, which means that you will be paying the mortgage off for a maximum of 30 years. Some contracts allow you to pay off the loan early, which will save you money in the long run. The thing is, 30 years is a long time. If your budget only allows you to pay the minimum amount, then you will have to make sure that you’re ready to spend that time fully paying off your home loan rates.
Australia offers two different types of home loans, known as a fixed-rate mortgage and a variable rate mortgage. Regardless of what option you choose, you likely have two questions on your mind:
- What is a good mortgage rate in Australia?
- Is 3.25% a good mortgage rate for 30 years?
What is a good mortgage rate in Australia?
Now is the prime time to buy for low home loan rates. Australia currently has one-year fixed-rate deals going for a historic low of only 1.67%, but this could change at any time. On average, fixed-rate mortgages have an interest rate of about 2.4%, depending on how long the fixed rate lasts. In contrast, mortgages at a variable rate tend to trend at an average rate of 3.22%.
However, very low interest rates tend to come along with very high upfront costs and deposits, meaning that, while you will save money in the long run, you will have to pay more in cash. This is a good option if you can afford the initial costs, but it doesn’t work for everyone’s budget.
Is 3.25% a good mortgage rate for 30 years?
It can be difficult to pin down a “good mortgage rate” because, while lower rates are better, they’re usually only available to people who are proven to be good borrowers. Unfortunately, not everyone falls into this category.
Also, mortgage rates change all the time. A good rate one day could look very different from the next. Currently, while 3.25% isn’t the best rate possible, it is a respectable one. This is especially true when you consider the fact that interest rates are likely to rise as the year goes on.
For the best advice, and the best potential rates, you should hire a mortgage broker to give you more information and to help you determine the best plan for your circumstances.