by Paul McBeth
New twists on old loans look set to continue, as new mortgage lending volumes appear to have plateaued.
However, borrowers are being warned to look at all aspects of a loan, not just the interest rate and any related giveaways, to make sure it both suits them and saves them money in the long term.
The recent launches of ASB Bank's Economiser and the GlobalPlus Home Loan have taken quite different lines. ASB has gone for the no-frills approach, with a cheaper interest rate but more conditions, while GlobalPlus tacks on reward points to the standard BNZ loan (see our recent stories on ASB's Economiser and the GlobalPlus Home Loan).
Kieran Trass, Managing Director of Apex Mortgages, points out that the few lenders offering lower interest rates tend to charge application fees that can sometimes offset the benefit of that lower rate.
Trass says you shouldn't automatically think you're getting a good deal just because the interest rate is lower than another lender is offering - "get an unbiased opinion before spending your hard earned and heavily taxed money!"
Meanwhile, mortgage bankers Cairns Lockie say they've had a few queries about how their home loan compares with ASB Bank's Economiser. In their latest newsletter they say that the Economiser, while priced at 7.10 per cent (current floating rate), comes with a set one per cent approval fee, a $10 monthly charge, compulsory ASB insurance (borrower protection or term life) and reduced flexibility in terms of split loans.
"The Designer Home Loan from Cairns Lockie is priced at 7.15 per cent, has lower application fees, no ongoing charges (monthly or annual), no compulsory insurance requirement and has the ability to break the loan into as many as four splits (to benefit from a mix of variable and fixed rates).
"The lesson here for potential borrowers is they must look beyond the rate and consider all aspects of the product."