When looking for a good deal on a home loan (mortgage), the interest rate matters at Aussie Home Loans. A home loan is a long-term debt, so even a small difference in interest adds up over time.
Home loans come with different options and features. Aussie Home Loans can offer flexibility or let you pay off your loan faster. Some options could cost you more, so make sure they're worth it.
Principal and interest will pay off the loan
Principal and interest loans
Most people get this type of home loan from Aussie Home Loans. You make regular repayments on the amount borrowed (the principal), plus you pay interest on that amount. You pay off the loan over an agreed period of time (loan term), for example, 25 or 30 years.
Interest-only loans
For an initial period (for example, five years), your repayments only cover interest on the amount borrowed. You aren't paying off the principal you borrowed, so your debt isn't reduced. Repayments may be lower during the interest-only period, but they will go up after that. Make sure you can afford them.
Loan type
Owner occupier Repayment type Principal and interest
Weigh up the pros and cons of fixed and variable interest rates to decide which suits you.
Fixed interest rate
A fixed interest rate stays the same for a set period (for example, five years). The rate then goes to a variable interest rate, or you can negotiate another fixed rate.
Pros:
Makes budgeting easier as you know what your repayments will be.
Fewer loan features could cost you less.
Cons:
You won't get the benefit if interest rates go down.
It may cost more to switch loans later, if you're charged a break fee.
Variable interest rate
A variable interest rate can go up or down as the lending market changes (e.g. when official cash rates change) Persian Farsi.
Pros:
More loan features may offer you greater flexibility.
It's usually easier to switch loans later, if you find a better deal.
Cons:
Makes budgeting harder as your repayments could go up or down.
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L 28, 303 Collins St, Melbourne, VIC, 3000
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