Type of Mortgage options
Variable Home Loan
This type of home loan is very popular among new homeowners, the interest rate is attached to the prime loan rate, if the prime loan base rate goes down by 1%, the interest rate follows, but unfortunately, it also works the other way around.
Capped Rate Home Loan
The criteria is very strict and hard to meet, it’s seldom available with a maximum rate built into the loan. When interest rates go down, you enjoy the benefits, and when interest rates go up, you are not affected since you are only required to pay the agreed capped rate.
First Time Buyers Home Loan
This is an opportunity for people who would like to invest in a home but may not have the required amount to deposit on it. Banks are now open to lending more than 100% of the purchase price, which includes registration and transfer costs. This works best for people who have never applied for any home loan or never owned any property.
Fixed Rate Home Loan
Has a fixed interest for a certain period, which covers one or two years. The fixed rate would always be higher than the base home rate but will protect you from increasing rates. This will free your mind from potential increasing interest rates since you already know what your repayments are. While this may be good, it will also be a disadvantage once the interest rate drops, since you will still be paying the same interest rate.
Reducing or Step Down Home Loan
Here there will be a guaranteed small interest rate decrease every six months for an agreed period. Even when the home loan interest rate rises or falls, the gradual reduction would still apply.