We generally think that the best home loan is by definition the one that has the lowest interest rate.

This is often the case but what is even more important than the home loan interest rate is the indicative rate over the course of the mortgage.

This indicative rate is the real, true and actual rate of interest after taking into account a host of factors such as the average rate ( after honeymoon periods ) as well as loan setup costs and fees. It also factors in loan servicing costs beyond the actual interest rate. When all these additional costs are totalled and described as a total overall interest rate then it is known as the indicative interest rate.

Having an indicative rate means that consumers can more readily compare home loans. Borrowers can therefore make a genuinely informed home loan comparison because they can compare the total costs of competing loan products when everything is taken into connsideration.

This is a much fairer method of comparing home loans and leads to a far better informed borrower.

The takeaway message from this information is that when you are selecting the best home loan for your situation you should avoid being seduced by the prospect of cheap honeymoon periods alone and focus far more fully on the complete cost of the morgage.

Such an approach can massively affect the amount of interest paid over the life of your home loan so be certain to choose wisely.