How To Know What Kind of Home Loan is the Best For You
Out of all of the different kinds of home loans that you’ve been offered by lenders, you may wonder which one is the best. There isn’t really an exact answer; the question is which one is best for you in specific. Luckily, once you know what the different kinds of home loans can do for you, you’ll see whether or not they can suit your own needs.
Repayment home loans
Repayment home loans are the standard kind of loans that you’ll probably see offered by every lender you talk to. They’re basic and easy to understand – and for that reason, they can be great for first time buyers who don’t want a home loan that may end up being complicated and difficult.
With a repayment home loan, you’ll be required to pay a small amount of the property’s full cost and a set amount of interest monthly, for the duration of the loan.
Interest-only home loans
This is the kind of home loan that’s great for people who earn a small amount each month. They’re similar to repayment home loans, but instead of paying both a bit of the property’s value and interest, you’ll only need to pay interest monthly throughout the loans term.
However, at the end of the term, you will have to pay the property’s full amount in one lump sum, so make sure that you’ll have the money before the end of the term if you’re thinking of getting one of these.
Variable rate home loans
With these types of home loans, the interest that you pay monthly can change. You see, the interest rate on a home loan is determined by the market’s rates – and if the market’s rates increase, then so will the amount of interest you pay.
But it’s not all bad, because the market’s rates can also drop, leaving you with lower interest to pay each month. Just remember that it varies all the time and you can’t be sure how much you’ll need to pay.
Fixed rate home loans
These are pretty much the opposite of variable rate home loans. The interest rate that you pay is set, so you will know exactly what you need to pay until the home loan is finished. The rate is set by the market’s rates at the beginning of the loan and won’t change, even if the market’s rates double or half.