Choosing the right home loan for your needs | Professionals Christies Beach RLA266739 - Your real estate professionals in Christies Beach, Morphett Vale and surrounding areas in South Australia

Choosing the right home loan for your needs

Christies Beach Blog | Investment Information | Latest News 27th January, 2014 No Comments

Taking your first steps onto the property ladder can be daunting, especially bearing in mind that a property purchase is often one of the biggest financial commitments most people will ever make.

While you might be seeking real estate advice on which property to buy, this is only going to be possible if you have a mortgage offer in place.

Assessing your finances is as much a part of the buying process as picking a location close to schools and public transport – and with so many mortgage types available, it pays to do your research.

Fixed-rate mortgages

Fixed-rate mortgages have witnessed a popularity surge in recent months, not least because the official cash rate is at an all-time low of 2.5 per cent and experts predict it could rise at any time.

December 2013 figures from Mortgage Choice show fixed-rate products were favoured by 33.06 per cent of borrowers, up from 30.56 just a month earlier.

Fixed-rate products are great if you want the certainty of a set mortgage payment each month, making them a popular option if money is tight and you are on a static income.

Variable/tracker rate loans

You might also want to consider a variable rate loan. These track the official cash rate, so you need to be prepared to face additional costs if it happens to increase.

If you can afford to pay a little more on your mortgage each month then these are worth considering – the rate might, of course, fall further and work in your favour!

Interest-only mortgages

If you choose an interest-only loan, you only pay off the interest on the mortgage for a fixed time.

While this reduces your repayments for a set period, bear in mind you will not be reducing the balance of the amount you initially borrowed.

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