Financial advisers should consider factors like inflation and possible rate hikes when helping clients pick a loan, the Mortgage and Finance Association of Australia (MFAA) said yesterday.
While introductory or honeymoon loans might have cheaper interest rates, they may reset into a higher rate after a period of time, MFAA chief executive Phil Naylor said.
"You may save in the initial period but look at the rate once the honeymoon is over," he said.
"A low initial interest rate does not always equal a better deal."
Naylor said planners should do their research and be wary of conditions their clients might face including looking at the rising cost of living, rate rise concerns and even at the prospect of a recession.
"If they do not planners are really not doing their clients a service," Naylor said.
"Make sure you are comparing oranges and oranges when you shop around."
He said it was important to look at the varying rates, terms and conditions and exit fees while planners and clients look at loans.
"There is no such thing as a free lunch," he said.
