For those who are new to home loans, it can be difficult to decide which type to opt for. There are a few different kinds of home loans out there, but a first time buyer will most likely want to know which one will suit their needs – in as simple a way as possible.
It can depend on your situation and what you want, but there is one kind that is generally best for people who are unsure what to do when it comes to picking a type of home loan.
The best home loan for beginners
Although there are different kinds of home loans that are suited to specific needs, there isn’t any one loan that has been developed to suit the needs of the first time buyer. However, there is a home loan type that has been tailored to suit everyone in a general sense; and this is known as a repayment home loan.
While this isn’t exclusively available or built with beginners in mind, it often tends to be better for those who are looking for a home loan that is simple and easy to understand.
What are repayment home loans?
Repayment home loans are the standard kind of home loans that you’ll see from pretty much every lender. It’s simple, basic and easy to understand – and for that reason, it’s great for first time buyers.
As with many other types of loans, you pay a set amount of money monthly until the home loan’s term is over, with an agreed amount of interest on top. This amount is a small part of the property’s full value, as has been divided over the course of the loan’s term.
Many borrowers find no issues with repayment loans – as anything complicated and difficult simply isn’t involved (after all, that’s the point of this type of loan).
Why can the other kinds of home loans be difficult?
Well, the reason why they are more complicated is because they are often more in-depth and have tailored areas to suit their specific type of borrower. Where repayment home loans were created to suit all kinds of lenders in a general sense, they do exactly what they say on the tin.
An interest only home loan for example, involves the borrower only paying back a set amount of interest each month, and not monthly increments for the value of the property in question. This amount is expected to be paid back at the end of the loan’s term, in one lump sum.