A funny thing about apples

I was in the supermarket the other day, buying some apples, when it struck me just how many different varieties there are available today. Granny Smiths, Golden Delicious, Jonathons, Red Delicious, Royal Galas and many others I can’t even remember. They definitely taste different to each other, look different to each other, but after all is said and done, they are still apples.

So as I stood there, looking at all the different varieties, I suddenly found a new understanding of that old saying about comparing apples with apples. Because that’s what I was doing.

I thought about this again more recently when I heard a media commentator comparing the available mortgages on offer from financial institutions. He was making the point that the major 4 Banks are more expensive than other smaller non-Bank lenders and online providers. The inference being made was that because they are all mortgages they are all the same and, in part that is true.

But like the apples, they may be of the same variety, but each one is still different.

Consider this. If I walk into my local Coles or my local Fruit Shop and I want Granny Smith apples, does it make any difference to me if they have Golden Delicious apples on special? Of course not. If I want Granny Smith apples and I want them because I like the crunch I get as I bite into them, the juice that flows as I chew them and the deliciously mouth-watering flavour that they have, then I’m not going to be interested in the less juicy Golden Delicious apples.

So it follows then that the type of mortgage you take out is more important than the price. If I want a loan with all the bells and whistles is there any reason to settle for something different just because it’s cheaper? The important thing is that get the loan you want, right? I’m not saying that it’s wrong to want the cheapest, not at all. But want the cheapest of the variety you want, don’t switch to a different variety, just because it’s on special.

Because unlike apples, in my experience, buying a cheap mortgage usually comes at a price when you discover later on that because it doesn’t have a feature you need, there is a price or penalty you have to cope with. And this is particularly true for a property investor.

There can be many reasons why the cost of one lender’s mortgage is lower than another’s.

Maybe one lender has no branch network or physical presence. Perhaps everything is done online or over the phone. Maybe there are limited options attached to it such as no Offset or Fixed Rates. Maybe redraw is not available or, if it is, there is a long drawn out process to get it done. Maybe the loan amount you want is less than you can get elsewhere. The list is endless.

The point is, it’s fine to get the cheapest loan you can BUT it’s also fine to get the not so cheapest loan.

What’s important is that you make sure you get the loan that you want and need for your particular circumstances. Which of course could be very different to someone else’s. No one else on earth has the same combination of wants and needs, dreams and desires, plans and goals that you do.

So, as I discovered in the supermarket, when I finally found the Granny Smiths I was looking for, there was no point me buying the Golden Delicious at a cheaper price, because when I got home and sat down to eat one, it wouldn’t have been what I needed or wanted. And that would mean I would end up disappointed.

If you’d rather not end up disappointed with your choice of mortgage and need some help comparing the apples to each other, please don’t hesitate to contact me. With 45 years experience, I can help you sort out which variety might suit you best.

Call 1300 663 836 or email vincent@investorsdirect.com.au

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