Understanding different loan types
Getting your home loan right at the beginning can put you in a winning position later. This means understanding what each type of loan is, and whether or not the features suit and meet your needs in both the shorter and longer term.
So whilst it’s important to choose a loan with a competitive interest rate, low fees and a mix of features that suit your needs, it’s good to be in the know with the types of loans on offer.
Here are some of the main loan types to look out for:
Variable rate loan. The rate of this loan has the ability to go up or down as the market changes. Variable rate loans give you flexibility to pay additional funds into your loan and have an offset account, but can also leave you open to rate rises which is something you need to factor in.
Fixed rate loan. Your interest rate and repayments will stay the same during the fixed term, no matter what. So no surprises. You are limited to how many extra repayments you make during the fixed term.
Split loan. A combo of the two loans above. You can lock part of your loan as fixed and the other part as variable.
Introductory rate loan. Also known as ‘honeymoon’ loans, these offer a low interest rate for a short period (eg. a year), after which the rate moves to the standard variable rate.
Construction loan. If you want to build a home or change the structure of your existing home, this is your loan. Most construction loans are interest only for the first year while the build is underway and interest is charged on the amount you draw down on from the loan for building repayments.
At Homeward finance we can run you through the features of each loan and which one could work for you, simply call us on (08) 81790500. Or if you’re ready to start the process, click here to begin!
Article source: www.loanmarket.com.au
Disclaimer: This document has been created by Loan Market Pty Ltd (ABN 89 105 230 019, Australian Credit Licence number 390222). Any refinancing is subject to lender imposed terms and conditions including but not limited to loan serviceability, valuations and confirmed capacity to service both any existing and revised lending arrangements. The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.