This type of loan is where you pay only interest for a fixed period, after which you pay for your principle. This method, however; does incur higher repayment costs of your principle after you come out of the interest-only period.
Variable Rate Loan
A variable rate home loan relies on the interest rate market and the standard rate. Depending on the interest rate market, this rate can rise and fall. This is excellent for lenders when interest rates fall, however; can increase costs when the market rises.
Fixed Rate Loan
A fixed rate loan is where you choose an interest rate that is permanent across the life of your loan. This loan type is excellent for when market interest rates rise, however; you may miss out of savings when it falls.
Split Rate Loan
A split rate loan refers to a loan that is sectioned into two different portions on which you pay different interest rates. For example, you may choose to pay a variable rate, to begin with, then switch to a fixed rate.
Fees & Charges
Fees and charges refer to additional costs that your financial institution has for offering services to you over the course of your home loan. This can include things like entry and set up, exit fees, as well as annual fees, depending entirely on your bank.
Step 6: Off To The Bank
Once you’ve chosen the right loan for you, it off to the bank to request a loan, set down the deposit and take out the loan. This is often quite nerve-racking, the act of locking yourself into a loan and having to make repayment for the next 10-30 years, however; once you get into a habit of meeting the repayments, things do get easier.