How well do you know your repayments? Discover how you can reduce your loan term and reduce your cost.
There is much more to home or investment property loans than just the interest rate. Fixed rate home loans, variable rate home loans, lines of credit and non-conforming loans – which is right for you? The experienced team of mortgage brokers at Cosimfree Home Loans in Geelong helps you make the right choice.
We sometimes call these “peace-of-mind loans”. A fixed rate loan means that the interest rate is locked in for a period of time decided by you. Fixed rate loans can usually be locked in for one to 10 years, and sometimes longer. With a fixed rate loan you can feel secure in knowing your repayments during the fixed rate period because the interest rate is “fixed”. But beware, early repayment penalties do apply!
We sometimes call these loans “flexibility loans”. They don’t have the security of a fixed rate loan when it comes to interest rate rises but they usually have more features and allow for greater flexibility. Variable rate loans mean the rate can change… up or down… during the loan term. Variable rate loans can be discounted by the lender based on how much you borrow, your equity, or how well we negotiate the best deal for you. Some variable rate home loans have a low rate during a honeymoon period and “no-frills” loans can have a lower variable rate for the life of the loan but then lack the “bells and whistles”.
These loans can be great in concept but do not suit everyone. A line of credit is an approved loan up to an agreed limit. You can pay as much off the loan at any time as you wish and you can access the difference between what you owe and the agreed limit at call. You might have your entire income directed to your line of credit every payday and this will reduce the interest you pay. You can then draw back out of the line of credit to cover your living costs. With proper advice and strict discipline from you, you can use a line of credit to reduce your debt, but do seek a mortgage reduction specialist to help you manage your line of credit effectively.
Non-conforming loans are for people who have difficulty gaining a traditional loan at a normal bank due to poor credit history or employment instability. Non-conforming lenders often show more flexibility in giving clients a chance to establish themselves. Some of our most grateful clients have been people who were just about to lose their home but who have been saved with our expertise in placing them with a non-conforming lender. They can be more expensive loans but they need not be forever and they at least provide an option for some when the banks say “No”.
Be careful when looking for the right home loan. Don’t just look for the lowest interest rate. Use a knowledgeable and professional mortgage broker to consider other things as well such as set up fees, valuation costs, lender’s mortgage insurance costs, early repayment fees, monthly fees, etc. We can simplify the loan process for you – please contact us to find out more.