|
|
Home loans in Australia
The Australian home loan market is now a highly diversified and competitive. The advent of foreign banks and
the expansion of the local lenders have made the scenario friendly for borrowers. Now, home loan availability is easier than ever. In simple terms, a home loan, or mortgage can be defined as the amount borrowed from a financial institution for the purpose of buying a property. For the purpose, the borrower has to pay an interest. The money, along with the mutually agreed interest needs to be repaid to the lender over a contracted period of time.
The home loans available in the Australian market can be studied under five heads. The basic
difference between them is the variants on interest rates offered. The home loan is called to have introductory or 'honeymoon' rate when the borrower pays a lower rate of interest for the first couple of years before the repayments revert back to the original interest rate. Variable rate home loans are the loan plans with interest rate fluctuating according the official cash rate set down by the Reserve Bank of Australia.
Fixed rate home loans as the name suggest are the loan plans that allow a borrower to lock in an interest rate
for a particular period of time, normally 1-5 years.Split home loans available in the Australian loan market are the mix of fixed and variable rates. If the borrower goes for interest-only home loan plans, then he/she only has to pay the interest portion. It is very essential on the borrower's part to clearly understand his/her immediate needs and anticipate future needs, as some product features he/she may want come at a cost. If the borrower does proper research and comparison, availing a cheap home loan plan is not a big deal. |
|
