There are lots of different types of loans out there, so you need to find one that’s going to work for you with the help of a mortgage broker or your lender. If you want to know more about home loan options get to know our mortgage broker business, Foundation Finance, but in the meantime here are some of the key terms you’ll need to know:
Variable rate: This means your repayments go up and down with interest rates. Typically you get more flexibility to pay off your home loan sooner.
Fixed rate: This gives you the certainty of knowing exactly what your repayments will be with the same interest rate for a set period.
Offset account: This is a transaction account linked to your home loan account. Money in your offset account can reduce the interest you pay by offsetting what you owe on the loan without limiting your access to this money.
Redraw facility: This is not a separate account but a feature attached to your loan. It allows you to draw back additional payments you’ve made on the loan.
Principal + interest loan: This is repaying the principal and interest on the loan, which results in paying less interest over the life of the loan versus an interest-only loan.
Interest-only loan: Repayments are lower for a set period because you’re not paying off the original loan itself. At the end of the interest-only period, your principal and interest repayments will be higher and it can increase the amount of interest you pay over the life of your loan.