| Getting a home loan can be a tricky business - there | | | | repayment flexibility. So this means that instead of |
| are so many choices out there, and it's not always | | | | paying monthly, you can pay fortnightly. This can be a |
| easy to know which one is right for you. Once you cut | | | | huge benefit, because if you pay fortnightly, over the |
| through all the bells and whistles, though, there are | | | | course of a year you actually make the equivalent of |
| really only 3 main types of home loan to choose from. | | | | 13 monthly payments. This helps to drop your home |
| Of the three, the most common type of home loan is | | | | loan balance more quickly, and often means you'll pay |
| the fixed mortgage loan. | | | | the loan off in 23-25 years. Definitely worth doing if |
| This mortgage has a fixed time period, say 30 years, | | | | you can! |
| for you to repay the loan. The good thing about this is | | | | You also need to make a decision about whether you |
| that over time your loan will decrease, but every time | | | | want an adjustable (variable) interest rate, or a fixed |
| you get a pay rise or some extra bonus money, you | | | | rate. This is always a tough choice to make when |
| can pay a little extra off and often pay out the loan a | | | | setting up a home loan - after all, the top economists |
| lot quicker. | | | | often struggle to predict what the economy and |
| You can also choose the time period you want the | | | | interest rates are likely to do over the medium term, so |
| loan for. If you're a little strapped for cash and want to | | | | you can hardly be expected to work it out! However |
| get the lowest monthly repayments you can, then look | | | | it's usually cheaper to go with adjustable rates, so if |
| at a 30 year loan. This is an extremely common time | | | | you have a little bit of room in your home loan budget |
| period, and will probably give you the most options to | | | | in case rates rise, that's probably your best choice. |
| choose from out in the market place. The good thing is | | | | Fixed interest rates work best for people who need |
| that with lower repayments, you have more money in | | | | certainty about their home loan repayment. It usually |
| your pocket each month to spend on other things like | | | | means you end up paying more to begin with, but at |
| food and bills. Unfortunately, though, the length of the | | | | least if interest rates rise you won't be caught short. |
| loan means that you pay a very large amount of | | | | Remember, too, that many home loans allow you to |
| interest to the financier. Still, it's a good way to get | | | | change your options as you go along. So if rates start |
| started cheaply. | | | | rising to the point where you're getting worried about |
| If you have a bit more money to spend, it's worth | | | | making the repayments if they rise again, you can |
| looking at a loan with a shorter term, say 15 years. This | | | | most likely change to a fixed rate home loan. Some |
| way you can pay your home of much quicker, and | | | | loans even let you have part of the loan as a fixed |
| have more funds available when the time comes to | | | | rate, and part as adjustable, to give you the best of |
| start looking at retiring. You also pay a lot less interest | | | | both worlds. |
| over the term of the home loan. Some people avoid | | | | In the end, every person applying for a home loan has |
| these loans because they're worried that if they lose | | | | a different set of circumstances, and it's vital to |
| their job, they'll have trouble making the payments. The | | | | understand what these are, and find the home loan |
| good thing, though, is that in situations of extreme | | | | best suited to them. It can take a bit of research, but |
| hardship, you may well be able to extend the term of | | | | by knowing exactly what type of home loan features |
| the home loan, and drop your payments substantially. | | | | you're looking for, you will be able to find it much more |
| A fixed mortgage loan generally also allows some | | | | easily. |