There’s a lot of jargon to unravel around home loans and it can be hard to figure out what the best finance option is for you!
At Zobel, we love to make things simple and easy for you, always taking into account your personal circumstances and the budget you are working with.
What Is A Home Loan?
Most people who are looking to buy a home will require a home loan.
It refers to the money that is advanced to the potential buyer in advance of the purchase to enable them to buy a home that they would not be able to buy outright. A Home Loan is paid back over a number of years at a pre-agreed rate.
Types of Home Loan:
There are a wide variety of home loan options available and it’s worth speaking to an expert to fully understand which one is right for you.
However the main difference you’ll start to encounter is between whether you want a fixed home loan or a variable home loan.
1. Fixed Home Loans
Fixed Home Loans have a fixed interest rate for an initial period, and the timescale of the repayment period is fixed – generally between 6 months and 15 years. Fixed Home Loans enable borrowers to keep their repayments fixed between 1-5 years with no change.
Advantages Of a Fixed Home Loan
The main advantage of a Fixed Home Loan is that you will always know exactly how much you need to pay back each month or quarter. This allows you to budget accurately and you won’t find fluctuations in your payments unexpectedly.
2. Variable Home Loans
Variable Home Loans are probably more common than Fixed Home Loans especially amongst first time buyers. With a Variable Home Loan, the loan starts using a lower interest rate for an initial period and will then fluctuate according to the market index.
Advantages Of a Variable Home Loan
The main advantage of a Variable Home Loan is that you have flexibility. If you want to make early repayments or you want to benefit from the reduction in interest rates, you’ll be able to do this quickly and easily. You could benefit from your loan payments being reduced if rate cuts are announced.
Which Home Loan Is Right For You?
Ask a Zobel broker help you find out which loan is right for your individual circumstances.