Home loan interest rates

Whether you’re getting a home loan for the first time or you’re just looking at your options There’s lots of ins and outs when it comes to finding the right home loan for you. So, to help you get your head around the different types of home loans let’s take a quick look at some of the interest rate options. First, let’s talk about the two main repayment types Principal and interest and interest only. With a principal and interest home loan you’ll need to pay the amount you have borrowed plus the interest charged on the amount over a set period of time. As the name suggests, an interest-only home loan requires you to only pay the monthly interest amount. This is usually much less than making principal and interest repayments Although the interest rate is normally higher. But on the flip side Interest only loans are usually for a set period of time Say five years. After this period you’ll need to start paying principal and interest which increases the repayments. Now, let’s look at your interest options. Let’s start with a variable rate home loan. This is a popular type of home loan when interest rates are expected to fall. It means over the course of your loan the interest rate you pay can go up or down. Another option is a fixed-rate home loan. With a fixed-rate home loan, your interest rate will stay the same for a fixed period of time. This is handy if you want the certainty of locking in a rate and the repayment amount for a set period. There’s also the option to split your home loan. So – part variable, part fixed. This means you get the benefits of a variable rate and the certainty of a fixed rate. So, repayments on the variable part of your loan will increase and decrease with the interest rate changes. but stay the same for the fixed part during the fixed rate period. There you have it. That’s home loan interest rates in a nutshell

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