Variable rate home loans
With the interesting state of the economy in recent times, home loan interest rate levels have had a major impact on the finances of young families and more mature home owners like. With that, most home owners, at some time or another, have pondered whether to have a variable rate home loan or a fixed rate home loan. A variable rate home loan is a mortgage where the interest rate rises or falls in line with the market. So – whenever the financial institution increases its rates in line with Reserve Bank announcements, your mortgage repayments increase accordingly.
The other option is to refinance your home loan to a fixed rate mortgage. A fixed rate mortgage (or home loan) is one where the interest rate stays fixed over the fixed term of the loan. That means monthly mortgage repayments stay the same on your home loan regardless of market fluctuations. This can be a great thing if mortgage rates increase but not so great if they go down substantially.
If you currently have a variable rate home loan and you’re uncomfortable with the way that interest rates are heading, you might want to consider refinancing to a fixed rate home loan. Before you do that though, consider that there are often hefty exit penalties if you want to pay out the fixed rate home loan within a set period of time or refinance to another type of loan.
There are numerous types of variable rate mortgages with all different types of features including loans with line of credit facilities, first home buyer loans, interest only loans, principal and interest loans and more. Some financial institutions will even allow borrowers to arrange a split rate home loan where people can hedge their bets by placing part of their home loan debt on a fixed interest rate and another portion on a variable interest rate.
With all these options available to borrowers knowing which variable rate home loan is right for you can be confusing, to say the least. With that, it’s very important to seek professional advice so you can be sure that the home loan you secure best meets your financial situation and your lifestyle goals. Talk to an experienced mortgage broker at Wealth Concerns and you can be sure the variable rate home loan you secure offers a great fit for your needs.
Contact Us
If you would like to discuss your specific circumstances call us on 1300 700 496 or alternatively text your name and number to 0411 320 962 and we will call you.