Home MONEY & BILLSMortgages & Loans Which home loan is right for me?

Which home loan is right for me?

by Penina

These days, there are more home loan options out there than ever. While it’s nice to have so many loans to choose from, the sheer variety of options can make it extremely difficult to find the one that’s right for you. All too often, home buyers become so overwhelmed that they rush into making a decision. That’s pretty much the worst thing you can do. Before selecting a home loan, educate yourself about the available options, one area to focus on is home loan rates. Weigh several different options to arrive at a home loan that is affordable, flexible and perfect for you.

Don’t have tunnel vision

Like many home buyers, you’re probably mostly concerned about the interest rate that attached to your mortgage. While the interest rate dramatically impacts the long-term cost of a loan, this shouldn’t be the only factor you consider. Sure, it’s great to have a competitive interest rate. However, that same loan may be saddled with all kinds of costs and fees, and it may be set up in a way that’s very inflexible. Despite saving money on interest, you may find yourself ruing the day you opted for a low-interest loan.

Know the pros and cons of the most popular home loan products

Familiarise yourself with the primary advantages and disadvantages of the most popular loans. For example:


Standard variable-rate home loans are the most popular for home buyers in Australia. The rate of the loan is subject to change, but the uncertainty is mitigated by superior flexibility. For instance, you are usually allowed to make extra repayments, are often allowed to withdraw those extra repayments as needed and are usually permitted to split the loan later. Basic variable-rate home loans usually have lower base interest rates but tend to be a lot less flexible.


The best thing about a fixed-rate loan is that your payment won’t change, so there’s a lot of security. Also, this type of loan is a great way to lock down a low rate. However, if you want to make extra repayments or withdrawals, you’ll likely face steep charges.

Split loans

These home loans offer the best of both worlds and consist of two parts: a fixed-rate portion and a variable-rate portion. They’re usually split 50:50 or 60:40.

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