If you’re wondering how do I get a home loan, then it can be confusing choosing the right home loan to suit your needs with so many options available. To help simplify this process the most important things you should consider are what features you really need your loan to provide and how much you’ll be paying in fees. You can also compare home loan rates by getting a key facts sheet from different lenders. So you can find the cheapest home loan to suit your needs, we’ve highlighted the wide range of loans available below:
Principal and interest home loans
This type of loan means that you make regular payments toward the principal (amount you have borrowed) and pay interest on top of that. When you sign up for this loan you generally have to pay it off in full over the life of the loan and if you want additional features such as an offset account or a redraw facility, you will end up paying more.
Interest-only home loans
When you invest in an interest-only loan you are only making repayments on the interest unless you choose to make additional payments to cover the principal.
Split, variable and fixed home loans
With a split home loan half of the loan is fixed and the other half is variable.
Variable home loans have an interest rate that fluctuates, generally in line with the official cash rate.
Fixed home loans mean the interest rate will stay the same for a set period of time, which is usually over two to five years.
While making additional repayments can often be a good idea, with fixed loans there are often penalties that apply for paying these out early.
An offset account is either a savings or transaction account which is directly linked to your home loan. The amount in this account is offset against your home loan, so you pay less interest. For example, if your home loan is $400,000 and you have $10,000 in your offset account you only pay interest on $390,000.
Depending on the home loan, some loans allow you to make extra repayments so you pay less interest on your loan and you can redraw against it if you need the money.
If you’d like some advice on choosing the right home loan or you need some assistance finding the house of your dreams, contact our property sales experts at One Agency Gamarra & Co.