How to choose the right Interest Rate for your Home Loan?
Do you need a Home Loan? Is it the right time to apply for a loan or should wait for next month/year? Are you confused which loan is suitable for you? Unsure what interest type and rate would be suitable for you?
At Kiwi Mortgages, we are happy to help you. Buying or building a new home or renovating your existing one, we have got home loans to suit.
There are some factors everyone should consider while deciding to apply for a home loan, such as interest rates, monthly income, your ongoing debt repayments, savings, and many other factors. This is where a broker or advisor comes in.
Home Loan Broker – Why you need a mortgage broker?
Finding a suitable home loan, interest rate plays a very important role. An interest rate can be fixed, floating or a mix of both. A mortgage broker considers your financial position, reviews your debt profile, analyses your savings, and works on your behalf with lenders, to find the best competitive interest rates, negotiate loan terms and then recommends a best deal that matches your lifestyle, budget and finance goals.
Types of Loans: If you are not sure, which mortgage is suitable for you, check these mortgage types:-
Fixed Interest Rate Home Loans:- A fixed interest rate lets you choose an interest rate over a fixed period. This can be a selected term, typically ranging from 6 months to 5 years. Over this fixed period your repayments will remain the same. You could break your fixed term but you might be charged a break fee.
Your fixed rate can’t be affected by interest rate changes. So, whether interest rates go up or go down, your repayments stay the same until the end of the fixed period.
Advantages of Fixed Interest Rate:
- Protects you against interest rate rises
- You can pick the time period to suit you; typically, fixed terms are available from six months to 5 years
- You know exactly how much repayment will be over the term.
Disadvantages of Fixed Interest Rate:
- You will not get benefit of falling interest rates
- Restrictions on extra repayments
- If you break your fixed rate term, your lender may charge additional fees
Floating/Variable Interest Rates Home Loans:- With floating rates, interest rate can go up and down in line with market conditions. If you have a variable rate, the interest rate you are charged can be less or more.
Advantages of Floating/Variable Interest Rate:
- You can make extra payments to pay off your loan faster
- Switch to a fixed interest rate at any time
- Your repayments go down if interest rates fall
Disadvantages of Floating/Variable Interest Rate:
- Your applicable interest rate can go up anytime
- If the interest rates go up, your cash flow may be affected, requiring suitable changes in your other expenses
Mix of Fixed and Floating:- Split loan is when you have some of your loan on a floating interest rate and remaining on a fixed interest rate.
If you are not sure “What is right for you? How much you can borrow? What your repayments would be?” get in touch with us for professional advice. Just call on Toll Free 0508 33 22 11 or email at firstname.lastname@example.org. Our team of experienced mortgage professionals, love to help you get the most out of your home loan.