Types of Home Loans
There are many different types of home loan available, including combinations of two or more types.
What follows are basic descriptions of the types of loan products available, but for more detailed information and assistance in determining which loan type or combination will suite your needs, contract Real Choice Mortgages.
Principal and interest
A loan in which both the amount borrowed, and the interest charged on that amount are paid during the term of the loan.
Standard variable
This is a common variable home loan, usually with a comprehensive array of features (as opposed to a basic variable).
Basic variable
Similar to the standard variable home loan, at a reduced rate but with fewer features than a standard variable rate product.
All in one loan
All in one loans allow you to deposit all of your income into the loan account, and then to draw upon some of this money to make routine purchases and other day to day transactions. The longer the excess funds remain in your loan account, the greater the interest savings.
Fixed interest loan
This is where the interest rate is set for an agreed term.
Capped rate
This is where the interest rate is not permitted to exceed a certain level for a period of time but, unlike fixed rate loans, can fall to a predetermined level.
Combination loans
As the name implies, the borrower can choose to combine variable, fixed or even a line of credit features in one loan. These are also known as "split loans" or "cocktail loans".
Interest only
This type of loan is commonly used by investors. It is invariably a short term arrangement, with payments made on the interest only (i.e. the principal is not repaid until the end of the loan).
Honeymoon loans
A loan is offered at a reduced rate for an introductory period ( usually no longer than 15 months) to new borrowers.
Line of credit
This is a flexible loan arrangement with a fixed limit, whereby the borrower is permitted to use funds representing the borrower's equity.
For more detailed information and assistance in determining which loan type or combination will suite your needs,
contact Real Choice Mortgages.
