Nowadays, when you take out a Home Loan, there are a number of choices available. Home Loans Australia is here to help you choose the right option to suit your own needs.
Variable vs. Fixed rate Home Loans
With a Variable Rate Loan, your interest rate will change in line with official interest rates. If the Reserve Bank lifts interest rates, you interest rate will probably rise, just as your rates will usually go down if official rates go down. In contrast, a Fixed Rate Loan will lock in your interest rate for a specified period, (usually 1 to 5 years), no matter what happens to official interest rates.
Split Rate Home Loans
A Split Rate Home Loan combines both Fixed Rate and Variable Rate loans. For example, you might have 60% of your Home Loan at a Fixed Rate, while the remaining 40% is at an interest rate that varies with the market.
Interest Only Home Loans
With an Interest Only Loan, you repay the interest on your loan without reducing the original amount of the loan, (the principal), which is only repaid at the end of the loan. Whilst this type of loan normally reduces your monthly repayments, you would expect to pay more in interest over the term of the loan.
A Redraw facility lets you to make extra repayments on your loan, then gives you access to those extra payments if you need them. This allows you to put extra money towards your Home Loan, saving you interest over the term of the loan.
Monthly, fortnightly, or weekly payments?
Some people prefer to make monthly payments on their Home Loans because they get paid monthly. However, many loans allow you to make payments on a fortnightly or weekly basis, which can save you interest over the term of your Home Loan.
The Ideal Home Loan
This is different for every person. Always remember, what seems like the cheapest interest rate can end up being an expensive loan if you don’t fully understand the fine print. That’s why Home Loans Australia is here to help you understand the different options available.