If you have no experience dealing with a mortgage, below is a list of its most common types. This will guide you on which available mortgages in Australia is best for you to consider.
- Variable rate
This is where the interest rate charged changes depending on the official cash rate set by Reserve Bank of Australia. Meaning, if they go up, your required repayments will do as well. On the other hand, when it falls, you will pay less each month.
- Fixed rate
Based on the name states, this mortgage interest rate remains, thus your repayments. It will not be in any way be affected by the movement in the Reserve bank of Australia. If you foresee that the interest rates will increase or you want some certainty on your repayments, then this is definitely suitable for you.
Most of the time lenders offer this type to their customers who are looking at periods of a maximum of five years.
The only downfall is that when the interest rates fall big time, you will not get the benefit of paying a lower rate. You can check out refinance loan interest rate in Melbourne services for more information.
- Honeymoon rates
There are some lenders offering honeymoon rates while in the early months of the mortgages. Interest rates presented can be a lot lower than the existing variable interest rate, which is only applicable for a limited time. Most of the time, the duration is between six and twelve months.
Once the introductory period is over, the standard current rate will be used.
- All in one loan
This is normally set up as an all in one transactional account including your savings, mortgage, and cheque accounts. All your cash deposits and income are paid into the account, thus reducing your loan balance. A credit card, most of the time, is linked to the account, and payments are taken from the transactional account monthly.
- Mortgage offset account
Your loan account is linked or connected to a regular account where your salary is credited. While the money is sitting in your savings account, it will then offset against your loan and there is absolutely no interest charged on that amount.
There are other available mortgages you can consider, better do your homework first before deciding which is best for your needs.