Securing your home loan is a scary process, there are many things that you’ll need to know and take into consideration. Understanding your options will ease your mind. There is no lack of information available online. You should take some time to learn more and also to talk with a professional to get answers to any questions that you may have.
Regardless of the type of loan you choose, whether it’s a table home loan, interest only loan or an offsetting home loan you’ll be faced with either a fixed or a floating interest rate. There are some people that split the amount they borrow with a fixed interest rate and a floating rate. This is always an option.
A fixed rate will remain the same during the duration of your loan. This means that you won’t be affected by the fluctuations in interest rates. With this type you’ll want to ensure that you are getting the lowest possible rate. Fixed rates are often lower than the floating rates. This is often the most common because it offers you consistency and security. You know what your payment will be each month. There are no surprises.
A floating interest rate will change with the market, so it will go up or down. You’ll have the ability to make lump sum repayments without being penalized. So when the interest rate is low you can make a larger payment to get the loan paid off sooner. With a floating rate you have the option to changing to a fixed rate. But you should know that this type of rate is often offered with specific loan types.
There are pro’s and con’s to both of these interest rate types. Often the choice is made based on your circumstances. For example if you expect to sell your home in the near future and believe that the rates will go down choosing floating interest rate may be the right decision. You can learn more by searching online.
You’ll want to take the time to examine your future plans and financial situation. Discussing it with your mortgage broker will help. Their expertise will guide you to the right choice. Don’t rush into any choice without thinking about it carefully.
At the end of the day, buying a home is one of the biggest purchases that you will make in your life. Hence, it should not be taken lightly.