Many home loan specialists and even banks offer home loans without cost – a loan without processing fees or interest. But, are they really what they make themselves out to be? Is there more to a home loan or mortgage with no costs than meets the eye? Here’s what you need to know.
No Such Thing As A Free Lunch
We have all heard that saying before, and it still rings true, especially for home loans. So, what is a no-cost home loan? Basically, it’s a loan where the lender covers costs such as application fees, processing and underwriting fees, and any other sundry fees that may come up. These fees can add up to a lot of money, so a fee-free loan may sound particularly attractive.
The reality, however, is not what it appears to be.
No-Cost Home Loans Means Higher Costs
Even though, a loan professes to be a no-cost or fee-free home loan, the costs are simply hidden in the monthly rate. Lenders are most definitely not charities and are in the business of making money. If they handed out fee-free loans and had to cover the costs, this would lead to much lower profits on their behalf.
Get To Know The Details
There are different types of home loans with no fees, such as home loans that offer no closing costs, or home loans without interest. Be sure that you take the time to really research the loan that interests you. Get to know all the details so when you meet with the lender, you can ask them the right questions.
No Interest Home Loans
As far as interest goes, there’s no such thing as a loan with no interest. Interest is how the lenders make money. If they didn’t charge it then there would be nothing in it for them. You can shop around for a lower rate, but unfortunately there’ll always be interest charged by professional lenders.
So, even though the no-interest or no-fee home loans may seem attractive, the hidden costs may outweigh the benefits. For any guidance on your Home Loan options, contact Blackbox Finance on 1300 70 12 17, submit an enquiry in the Contact Us box below or email us at [email protected]. Your trusted mortgage broker for Palm Beach, Currumbin, Burleigh Heads and all the beautiful surrounding areas.