Mortgages

If you haven’t worked with mortgages for many years like we have, it can be confusing to understand what the different types are and how one kind is different from another. There a few major types of mortgages that you’ll often get to choose from, and we’ll help you pick the one that will benefit you the most. 

Fixed-term home loan

With a fixed-term home loan, you get to choose the period you want to fix your loan for. For instance, if you choose a 3.99% rate for 12 months, you’ll know exactly what your payments will be for those 12 months. However, in most cases you are unable to increase your payments to pay off your loan sooner, but this is a good choice for consistency and planning. 

Floating home loan

With this type of loan, you get more flexibility and can increase your payments at any time to pay off the loan sooner. However, the interest rate can change and can cause you to pay more over time, especially if you only pay the minimum amount. One way to make the best of both options is to have a specific amount on a fixed-term and another amount as a floating home loan. That way, you can pay off the floating loan more quickly and still have a large portion at guaranteed rates. 

Offset Mortgages

This loan is a way that can help you reduce your overall interest amount; or increase it. An offset mortgage takes the balances of your everyday and savings accounts and subtracts that number from your loan, and then you pay interest on what’s left. For instance, if you have $250,000 left on your loan and you have $50,000 in savings, then you’ll pay interest on $200,000 instead of $250,000. 

If you have a decent savings account, these work great! However, they come with a higher interest rate, so if you only have a few thousand in the bank you would end up paying more than you would with a typical fixed-rate loan. 

Which type of mortgage is best for me? 

Most people start out by either having a floating or fixed-term mortgage. But either of those might not necessarily be right for you. Along with this list, there are also several other types of mortgages that could be better for you based on your specific situation. 

The only way to accurately determine which mortgage is best for you, we need to talk with you and learn about your finances and your goals. 

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