Finding the right mortgage structure is essential to applying for a home loan. First home buyers should read about their options below and ask our expert mortgage brokers for assistance.
Interest Rates
Fixed Interest Rate
Set from the beginning what your monthly payments will be at a fixed interest rate. Lenders often have competitive rates and you may choose to fix rates for a few months or a few years. This makes it easy to budget but you can lose out if the market rate drops.
Floating/Variable Rate
Floating rates means your interest rate changes with the market. These rates are usually a bit higher than fixed rates, though can drop below them, saving you lots of money. There is also no penalty for paying extra when you can.
Mixed Fixed and Floating Rates
Many split their home loan into a few segments and fix some while leaving other floating. This enables you to make extra payments if you can.
Repayment Structure for Home Loans
Table Loans
This is the most straightforward repayment structure for home loans, with predetermined monthly payments.
Interest-Only
Pay only the interest, rather than the principle, for a period of time. This means you’ll have more cash at hand, but ultimately costs you more in the long run.
Revolving Credit
Best for those who have uneven income and are very good at controlling their finances, a revolving credit account calculates interest based on how much money is in your account on a daily basis. Your pay goes straight in and you pay bills and regular expenses directly from this account. You can pay off your mortgage faster, but it is a little more complex.
Offset Mortgages
If you have a lump sum available, that you may need to access, an ‘Offset’ structure may suit. For example, if your Mortgage is $500,000+ and you have $100,000 available, you can structure the Mortgage so you only pay interest on $400,000.
