Are you trying to get yourself the right loan for your new home? Have agents been calling you day and night and harassing you with terms that you just don’t understand? Buying a home can be a daunting task if you don’t have anyone to hold your hand along the way, especially if this is your first home.
As furniture removalists we hear all sort of stories, good and bad, about the arrangements people have made in negotiating their home loan or commercial loan.
Of course, after you buy it, you’ll have to move your belongings. That’s when most people begin assessing their approach to handle their local furniture removal or interstate furniture removal and issues with moving via a backload. Nonetheless, the first step is to get the right loan, because no matter how or where you move to, if you get yourself the wrong type of loan, nothing else matters.
Loans are Being Offered Everywhere
After you pick out your new home, you have to review what steps you should take to finance this purchase. There are many different kinds of loans out there and they are marketed by all sorts of different lenders who offer varying interest rates as well as benefits. From banks to private lenders, new and experienced homebuyers, nowadays, have many options.
Due to this, most people are confused about which type of loan works best for their particular situation. In fact, most people don’t even know the pros and cons of fixed home loans and variable home loans.
The Importance of the Interest Rate
Of course, it goes without saying that the first thing you should watch out for is your interest rate. What would work better for you; a variable home loan or fixed home loan? Both options have their merits and negatives. After making this decision, you then have to make a choice on the type of loan you prefer under this specific category.
First off, figure out which one of the two is doing better in the market. A fixed rate home loan charges you a flat interest rate throughout the entirety of the loan whereas a variable rate home loan will have an interest rate that adjusts depending on the market movement.
Sometimes you’ll be making lower payments and other times, you’ll have to pay more due to a higher rate of interest. Interest is tacked onto the payments you have to make on a monthly basis.
Fixed Rate Home Loan
Many feel that the fixed rate home loan is a much better choice because:
o Should the marketplace be in a volatile position, your interest rate won’t increase
o The monthly payment won’t be raised due to a volatile marketplace
o You will be secure in knowing you’ll never be surprised by your loan bills
Variable Rate Home Loan
Most borrowers highly favor the variable rate home loan. The interest rate attached to this loan will vary depending on the condition of the market. Your interest rate will be determined by the financial index rate as listed the regulating Federal Bank in your country. An example would be where the current index is at 3.5%, and then the lender will increase your rate by 0.5% making your interest rate 4%.
Now that you understand the key differences between a fixed and variable loan, it’s best that you sit down with your accountant to figure out the numbers. Don’t get suckered in by mortgage brokers without first doing your homework; it’ll save you money and headaches in the long run.