How do interest-only home loans compare to principal and interest loans?

Interest-only loans only require you to pay the interest due on the sum you borrowed and not the principal. They’re most suited to people wanting to pay the minimum amount possible on their loan for the opening few years of their loan. They’re popular with property investors wanting smaller repayments whilst they don’t have tenants or are renovating or decorating it. First homebuyers who can’t afford large repayments are sometimes offered interest-only loans for the first year or two until they’ve paid off other moving costs. People building their own home can also access interest-only loans with a construction loan .

Can I get a loan for less than 30 years?

Yes – in many cases you can take out a loan over the number of years which suit you. Of course, the fewer years you have to pay off your loan, the higher your repayments will be, but the less interest you’ll pay overall.

How are fixed rate loan break fees calculated?

Break fees (or early exit fees) are calculated using a complex formula which takes into account the loss the lender will suffer as a result of you breaking the loan agreement and swapping to a lower-rate loan. The length of time remaining on your fixed term loan is also used in the formula, so the less time you have remaining on your fixed term, the lower your break fees will be.

How does refinancing affect my credit rating?

Each time you apply for a loan it will appear on your credit report. Refinancing will not negatively affect your credit report unless you make multiple loan applications in quick succession, which can also paint you as an undesirable borrower, particularly if you’re rejected for several of them. This is why it’s important to use our loan comparison service in advance before you make your home loan application.

Will I get a 'black mark' from my bank if I switch to another lender?

No – banks and other lenders don’t take things personally, so should you decide to switch to another lender who offers a better loan deal, that’s your choice. If you decide to return to your former lender or bank in the future, you’ll be welcomed back as a customer.

Why do online lenders charge less in fees?

Online lenders don’t have to pay for expensive infrastructure (such as high street branches) that the big banks have to maintain. With fewer overheads, they’re able to offer more competitive home loans with lower interest rates. Savvy compares a range of home loans from different lenders to make sure you can find a loan that best suits your personal needs.