Being able to secure your ideal loan amount can seem like a battle of balances. Once you’ve worked your budget and finances through a spreadsheet, there’s still the one issue left to deal with: assessment rates. This is also  known as an ‘interest rate buffer’.

Getting in while the going’s good and securing your loan while interest rates are low, doesn’t change the fact that lenders are compelled to ensure that you will be able to make repayments if interest rates fluctuate. Matching the features of a loan to your financial position is important, and often requires a third-party expert to help guide you through.

Assessment rates add a margin to the variable or fixed interest rate of your loan. The assessment rate provides added protection that you will be able to repay your loan when interest rates rise, because they are sure to rise and fall throughout the life of your loan. The assessment rate can be anything from 1.5 – 2% above the variable rate, depending on the lender, and many are currently using rates of approximately 7-8%.

Mortgage assessment rates vary from lender to lender, which is why different lenders may offer people in the same financial situation, different loan amounts. In some cases, the difference in loan amounts offer by different lenders can go into tens of thousands of dollars, but the biggest loan isn’t always the most suitable. Ensuring that you can pay your loan, whether rates stay low or rise, requires a bit of know-how.

For further information contact me on 0402 203 303 or email me at rob@rwfs.com.au.