When you're trying to find the right home loan for your situation, it can feel like there are countless options to choose from. However, there are two main types that you should know about, which will possibly apply to you and your property goals.
Fixed Rate Home Loan
A fixed rate home loan is one of the more common mortgage types that Australians choose. This could be perfect if you're a first home buyer, or simply looking for some financial security while you make repayments.
The home loans secure you a fixed interest rate for a period of time (usually three to five years), during which the amount of interest you pay won't vary. Due to the ever-changing economic conditions in the country, this could be a great option to consider.
Variable Rate Home Loan
On the other hand, a variable rate home loan could be a great option if you're hoping to secure lower repayment amounts.
These mortgages are tied to variations in the economy. If the official cash rate is at a lower level, the amount of interest you pay will reflect this.
However, keep in mind that if the economy begins to climb, so to will your repayment amounts. This could make variable rate home loans a potential option for investors, or people who are willing to risk climbing interest rates.
Another benefit of choosing a variable rate is the flexibility of the loan. With these mortgages, it's often possible to secure a number of facilities that can help you to strategically make your loan work for you.
Whether this is through an offset account, or more refinancing options, this could be a great option for someone looking to utilise the options available. Of course, there is substantially more risk involved with this, so it is best to chat with a home loan expert before committing.
You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we'll call you!
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.