What is home loan?

Home loan, also sometimes called a mortgage, is a loan you take out from a bank or lender to finance the purchase of a property. It's a large sum of money that you borrow and pay back over a long period, typically 25 to 30 years.

 How it works

Borrowing the money: You get the loan amount from the lender, which covers a portion of the property value. You'll need to provide a down payment for the rest.

Repaying the loan: You make regular payments to the lender over the loan term. These payments typically include two parts:

Principal: This is the amount you originally borrowed. With each payment, a portion goes towards paying down this principal amount.

Interest: This is the fee you pay for borrowing the money. It's calculated as a percentage of the remaining loan balance.

Security for the loan: The property itself serves as security for the loan. This means if you don't make your repayments, the lender has the right to repossess and sell the property to recover their money.

Home Loan Types

There are different types of home loans available, each with its own features and interest rates. Here are some common types that most people consider.

• Variable Interest Rate: 

Interest rate fluctuates based on the Reserve Bank of Australia's cash rate.   

Offers flexibility with extra repayments and redraw facilities.   

Suitable for those comfortable with potential rate rises.

• Fixed Interest Rate:

Interest rate is locked in for a specific term (usually 1-5 years).   

Provides certainty about repayments.  

Less flexible with extra repayments and redraws.

Suitable for those seeking stability.

• Split Loan:

A combination of fixed and variable interest rates.   

Offers a balance between stability and flexibility.   

Based on Repayment Structure.

Which one for you?

It's important to compare options and find a loan that suits your financial situation and goals.

If you are not sure which loans are suitable for you, contact us today for a free consultation.