Todays post is a guest submission from Chris Hamilton over at Mortgage Brokers Online.
Home loans offer different terms and conditions. To finance your purchase of a new home or the renovation of your existing residence, you must find a suitable home loan for it. Here are the different home loans that you can consider.
As the name suggests, the fixed home loan has a stable payment mode though the market interest rate changes. This gives a borrower repayment stability for the duration of the loan term despite official cash rate changes. On the downside, extra repayments are not allowed for fixed home loans and you might even be penalized for doing so.
Meanwhile, the variable home loan allows a borrower to pay in varied amounts. More loaners avail of this option since it is heavily dependent on the market interest rate so repayments can either be high or low. If the official cash rate is high, you will end up paying rates that are higher than usual. Variable home loans also have more features such as the redraw facility and line of credit which you can use for other expenses.
On the other hand, honeymoon home loans are loans that start with a low starting interest rate for a year or two. After which, the rate reverts to normal rates. However, honeymoon loans tend to pass more expenses to you as the loan progresses. Some of the fees that might have to shoulder are valuation fees, application fees, establishment fees and many others.
There is also a no deposit home loan which allows you to borrow the full amount of the house’s purchase price. However, this deal entails additional stamp duty fees and conveyancing charges. You can also go for non-conforming loans such as low-document home loans wherein you only have to show a proof of income for your loan to be approved. However, this loan is classified as risky.
If you are applying for home loans to improve your investment portfolio, you can opt to have different lenders for your properties to avoid loan restrictions. To compare home loans, you can consult your trusted mortgage broker who can do quick comparisons for you.
You may also view loan numbers in a flash using mortgage calculators. With a mortgage calculator, you can find out the best home loan deal or home loan repayment frequency for you by typing in your income, your expenses and other pertinent information.