Anyone who has arranged a home loan in recent years will be aware that loans now come in all shapes and sizes and can be individually tailored to suit your unique situation. Loan products can include lines of credit, standard home loans, fully featured home loans, fixed rate loans and offset accounts. For those who might not be familiar with these products, let’s look at a few in more detail.
Introductory or “honeymoon” rate loans
Virtually every bank in the marketplace now offers home loan borrowers a loan with an introductory or “special honeymoon” rate. The introductory rate is usually at a lower interest rate than the standard variable home loans and runs for a specific period of time, say six months or one year. After the honeymoon is over, the interest rate on the loan will revert to either the standard variable home loan interest rate or sometimes even a higher interest rate. Be careful when choosing this loan that you can afford repayments at the post-honeymoon higher interest rate level.
All in one home loans
This type of home loan allows you to combine your savings account, cheque account and home loan account in to one. This means you have all your income deposited directly into your loan account and because interest on your loan account is charged daily (but billed monthly) you effectively reduce the amount on which interest is calculated. If you need money, you can simply withdraw it from your home loan account as you would a normal savings account.
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| Choosing the perfect home loan |
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HOME LOANS - Contact your Burns & Burns consultant for a range of current details.
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