Whether you’re a first home buyer, investor or anything in between, there’s a wide variety of mortgage options on offer. Unsurprisingly, trying to find the right mortgage can be downright confusing.
The good news is, that with the help of a qualified mortgage broker, you can find the ideal loan to suit your needs.
Here are a few of the most popular mortgage options:
As the name implies, you are only required to pay interest on this loan, and do not have to pay the principal loan amount.
Principal and interest rate mortgages
If you choose this very popular option, you are required to repay the principal loan amount, as well as the interest accrued on the loan.
Variable rate mortgage
Repayment amounts on this mortgage option vary according to current interest rates. As such, throughout the life of the loan, you will pay more or less, depending on whether interest rates rise or fall.
Unlike variable rate mortgages, the repayment amount is set in stone from the outset. This way, you know exactly how much you’re expected to repay each week, fortnight or month. The average length of a fixed-rate loan is between one and five years.
Split home loan
This loan allows you to secure part of the mortgage at a fixed rate and the remainder at a variable rate. When mortgage rates fall, you will pay less interest on the variable portion of your loan. And, if rates should rise, you are not taking a major financial risk with a split home loan.
This short-term loan (generally 12 months), is ideal if you are purchasing a block of land, building a new home or renovating your current home. With a construction loan, you can borrow up to 90 percent of the property’s total value.
If you have recently purchased a block of land but do not plan to build on it immediately, a land loan is ideal for you. This option is a variable interest loan with an average length of 30 years.
With an equity release loan, you can convert a portion of your residential property into a lump sum of cash or a regular income stream, while still living in your home.
This option is designed to help self-employed people secure a home loan. By gathering relevant supporting documentation, you’ll demonstrate your ability to repay the loan. This documentation includes things like BAS and bank statements. A non-PAYG loan enables you to borrow up to 80 percent of the principal loan amount.
If you have a variable home loan and are able to make extra repayments, this option allows you to withdraw this additional money if necessary.
If you’d like more information on these mortgage options, or help deciding which loan is right for you, contact the experienced Mortgage Australia team today.