If you’re a medical professional considering taking out a home loan, you might be wondering what the typical interest rates are for people in your field? The short answer is that home loan interest rates are affected by a number of things, like your financial standing and general economic factors.
Let’s take a look at some of the variables affecting interest rates on home loans for doctors, dentists and vets, as well as how to get the best interest rate for your situation.
The Reserve Bank of Australia sets a cash rate that is reviewed on a monthly basis to control monetary policy. Lenders set their own interest rates and can choose to increase or decrease their home loan interest rate based on changes to the cash rate.
Fixed rate vs. variable rate
A fixed rate allows you to lock in an interest rate on your home loan, usually for between one to five years.
A variable rate, on the other hand, changes in response to the cash rate and other factors. The advantage of a variable interest rate is that they can go down with the cash rate, decreasing the amount of interest you pay. However, unlike fixed rates, you might have to pay more interest over time, which can impact your ability to plan your finances.
Loan to value ratio (LVR)
Your loan-to-value ratio (LVR) is determined by dividing your home loan amount by the appraised value or purchase price of your property. Typically, an LVR higher than 80% signals a higher risk to the lender and could incur a higher interest rate.
Some lenders, including BOQ Specialist, offer special home loan benefits to doctors that allow you to borrow more without having to pay Lender’s Mortgage Insurance (LMI) – so it pays to shop around for the right lender.
Find out what your minimum weekly, fortnightly or monthly home loan repayments would be with our home loan repayment calculator.