Are You Looking to Buy A House?
Mortgages come with different options and features. It’s always good to know more so you would have a clear idea where you and your family are standing on. Below are information to help you to get an idea of home loan. Alternatively, Contact our Financial Expert HERE, or Directly Lodge an Application through the button below and we will do the rest for you.
Principal and interest loans
Most people get this type of home loan. You make regular repayments on the amount borrowed (the principal), plus you pay interest on that amount. You pay off the loan over an agreed period of time (loan term), for example, 25 or 30 years.
Interest-only loans
For an initial period (for example, five years), your repayments only cover interest on the amount borrowed. You aren’t paying off the principal you borrowed, so your debt isn’t reduced. Repayments may be lower during the interest-only period, but they will go up after that. Make sure you can afford them.
Fixed interest rate
A fixed interest rate stays the same for an agreed period. The rate then goes to a variable Interest rate , or you can negotiate another fixed rate.
Pros:
- Makes budgeting easier as you know what your repayments will be.
- Fewer loan features could cost you less.
Cons:
- You won’t get the benefit if interest rates go down.
- It may cost more to switch loans later
- You might be charged a break cost if you make extra repayment
Variable interest rate
A variable interest rate can go up or down as the lending market changes (for example when the cash rates change).
Pros:
- More loan features may offer you greater flexibility.
- It’s usually easier to switch loans later, if you find a better deal.
Cons:
- Makes budgeting harder as your repayments could go up or down.
- More loan features could cost you more.
Partially-fixed rate
If you’re not sure whether a fixed or variable interest rate is right for you, consider a bit of both. With a partially-fixed rate (split loan), a portion of your loan has a fixed rate and the rest has a variable rate. You can decide how to split the loan (for example, 50/50 or 20/80).
Line of Credit
A line of credit is a preset amount of money that a bank or lender has agreed to lend you. You can draw from the line of credit whenever you need it. The biggest advantages of this product is the flexibility that comes with it. You also has the discretion on how you use the fund, even to buy shares. This is one of the cheapest way to borrow to invest.