Buying a new home or property is a very serious matter and a very important topic and when it comes to this kind of talk, it is important that all knowledge and options are laid out on the table. When it comes to purchasing new property, this usually requires us to consider applying for a loan as it is a convenient way to cover the cost of the home and won’t heavy when starting out. Applying for a home loan or getting mortgage is very important as this can ease the purchase of your property and can be considered a more strategical approach when it comes to business involving getting new property. There are different mortgages though all depending on what kind you have applied for and depending on what is more comfortable for you, there are a lot to choose from.
The different mortgages or home loans are:
Variable Rate
A variable rate home loan will have the chance of your interest rate increase or decrease during the time of your loan. This may happen due to various reasons such as the official rates changing, certain fees that require assessing due to unforeseen issue or a simple decision of the company in charge of the finance. This allows you to pay as much as you want without having a limit to how much you can add but may be a problem if the price goes up and you don’t have enough to compensate for it.
Fixed Rate
A fixed rate home loan generally focuses on lower payment at the beginning followed by a fixed rate to be paid over time. Usually the length of time is set from 12 to 60 months or 1 to 5 years. The amount you will pay will be the same and will not change but it will usually be a bit higher altogether and in total which may be a bit heavy when the full payment is done. With a fixed rate the payment is assured and the inflexible schedule of payment compensates with the rate and the added taxes or value.
Split Interest
A split interest loan is an option you can choose when you decide to pay part of the loan at a variable rate while later on you change your mind or plan to pay the rest at a fixed rate. This may be planned out or done the other way around depending on what best suits your interests and financial capability. Basically you are paying for the loan with both a variable and fixed rate whereas part of the loan is fixed rate and the other is a variable rate.
Interest-Only
With an interest-only loan, the borrower will be paying only the interest to cover the term partially or fully. The amount borrowed will be reduced by the payment of interest and after a period of time depending on what was negotiated and decided, the loan becomes a principle and interest loan. Interest-only loans usually higher than the normal principal an interest loans.
Line Of Credit
Based on the value or equity, a value will be set as your loan which you will have access to and may continuously borrow and pay back. The interest rate is higher with this kind of loan but you will be able to control the amount you wish to withdraw from the loan and later on pay it back depending on how much you actually need or used. This is better for saving and should be considered as a careful decision to avoid reducing your home equity.
First Home Buyer
The first home buyer home loan is available for those who are buying a new property for the first time where depending on the state they will have a certain tax stamp that they may handle along with offers of home loan plans that can be any of the previously mentioned loans. The advantage for new home buyers is that they will be able to have an easier time by being offered different opportunities such as less fees or lower interest rates.
Owner Occupier
The owner occupier home loan is available to those who already own a home which may be mortgaged or paid for but still plan on purchasing a new property or renovating their current one. This allows them to get a loan that will supply them with the finances they need to do so.
Construction
For those who plan on building their own homes on a new space or from an old one, the construction home loan is available which may be used to pay for the construction and or the supplies that are need for the construction of the house. This allows people who prefer to build their home instead of buying a pre-built one to have the chance to construct or have their new home constructed. As construction may cost a lot depending on what you have planned, going for a construction load may prove very helpful and is a great choice for those who intend on building their “dream home”.
Guarantor
The guarantor home loan allows you to have a family member or someone currently residing with you may be selected. This will require them to pay for the loan if you are unable to pay for it on time and by having a guarantor, the chances of approval for a loan may usually be approved. Aside from having a higher chance of being approved, the guarantor loan also allows your family member or whoever you have chosen as a guarantor to help you out in the case of any problems paying for the loan.
Low Doc
A low doc loan is a loan for people that are unable to provide the lenders with the necessary information due to factors that they are self-employed or their source of income does not have the documents that meet the requirements of the lender. This loan may be applied for but the interest rate will be higher and the requirement of some other documents will of course be required for more information. With this loan option, those with less documents may have less of a hard time getting their loan for the things they need.
Investment
An investment home loan is a loan one can apply for to buy property that they tend to use for business or rent in order to make money. This allows those who plan on using the property to earn to apply for a loan to purchase that property so they may use it to earn. With this loan, they can get an approval that will let them acquire their property by using that loan and may use it for earning which later can be used to pay for the loan as well as make a living. This is a good technique and used by many people that start or plan on increasing their renting business.
Refinancing
The refinancing home loan is for those who seek to either switch to different mortgage, sell their home and buy a new one depending on several plans they may have. This can be done if one is seeking to get lower interest rates or make money off of one of their mortgages or homes in order to save for renovating or purchasing newer one. This may also become an option when one is trying to make money off of one of their existing properties or mortgages in an attempt to deal with certain debt or payments they need to fulfil.
There are different types of mortgages or home loans and depending of if you plan to purchase a new home, move into a different home from your current mortgage, sell property you currently have mortgage on, purchase property to earn from it and more. There are many possible options to choose from and these all can help you out depending on what plans you have. It is wise to know which plan is best for you depending on how you may handle it and if you have the capacity to do so. There is always a better home loan for each plan that you have so it is best to either consult a mortgage broker who can help you find the right product for you.