Types of Loans Available
When it comes to finding a mortgage, the possibilities are endless. However, being overwhelmed by choice doesn’t mean you should take whatever is offered to you first. Contact me for information about different types of mortgage loans and I’ll be happy to explain them and help you find one that suits your needs and preferences.
Variable Rate Mortgage
A variable rate home loan is a home loan with an interest rate that may change over time.
If you choose a variable rate home loan, you may be able to take advantage of any interest rate decreases over your loan’s term. If your rate decreases, it means you pay less interest on the home loan balance.
There is also the chance you may find that your interest rate increases, which would involve paying a higher interest rate and regular repayment amount than at the start of your loan term.
Fixed Rate Mortgage
A fixed rate loan is often chosen when clients want the certainty of knowing that the interest rate won't change over a certain time period.
This type of interest rate can be great if the market starts increasing after you have locked in the rate however you could end up on a higher interest rate if the interest rates decrease also.
If you choose to break out of a fixed interest rate during your fixed period you may also incur break costs so it is always important to discuss this with your broker and understand the consequences if you break out early.
Split Loan Facility
This type of loan facility is a great option if you can't decide between having a variable or a fixed home loan.
As the name suggests you can have part of the loan variable and the other part fixed in whatever proportion suits your needs.
Having a split loan gives you both the flexibility of the variable and security of payments on the fixed proportion.
