The interestrate is one of the most important deciding factors in choosing a home loan. Most people don’t realize that there’s more to interest than just the rate. If you understand your options regarding interest well, you’ll be able to make a better-informeddecision. Here’s a look at the interest options available on Home Loan Comparison co:
The Four Interest Rate Options
Most people are only familiar with fixed and variable interest rates, but there are other options available. Here’s a look at all four types of interest rates you should know about:
- Variable Rate – Under this option, your home loan interest rate increases or decreases based on market conditions. While the uncertainty attached to this type of loan can be alarming to many, you might end up saving more money down the line. Most lenders prefer this rate.
- Fixed Rate –Fixed interest rate is fixed for a set period of time, which usually lasts for 5 years. It doesn’t fluctuate with market conditions, which can give you some financial stability in the beginning. This option can prove to be more expensive in the long run.
- Partially Fixed Rate – Under this option, you can split the loan in two; one with a fixedrate and the other with a variable This option provides the stability of fixed-rateloans and still allows you to capitalize on the flexibility of a variableinterest rate.
- Introductory Rate – Under this option, lenders offer low interestrates for the first few years before switching to regular interest rates. This is particularly advantageous for people on a limited budget or new home buyers. However, it is important to know what kind of interest rate you will have to pay after the honeymoon period is over.
An experienced professional from Home Loan Comparison co will help you choose the right interest rate by explaining the pros and cons of each option.
Impact of Loan Value Ratio
The LVR or Loan Value Ratio is determined by dividing the home loan amount by the house purchase amount. This ratio will affect your interest rate, loan terms, and flexibility. Loans with this ratio going above 80% will have higher interest rates. They will also require lender’smortgage insurance, which will cost additional money. Home Loan Comparison cowill help you understand your LVR and its impact.
This means you get more benefits if you pay a higher downpayment amount. If you want to know more, don’t hesitate to contact us at Home Loan Comparison co on 0419 856 669.