Blog: Common home loan questions
For many first home buyers, being presented with the wide variety of home loan products on the market can result in more than a few questions.
If you're looking to find your first mortgage, here are a few common queries which may come up along the way.
Should I opt for a fixed or floating rate?
This is a classic dilemma which many home buyers face, and the answer to this will depend largely on your individual circumstances.
A fixed interest rate can provide many benefits for those who prefer certainty when it comes to their home loan, giving you the ability to know exactly how much you will be making in repayments.
On the other hand, a variable or floating interest rate will change in response to a number of factors, most notably changes in the official cash rate. This can potentially reduce the amount of interest you pay on your loan, but if the cash rate increases your interest may also go up as a result.
A partially-fixed or split rate loan is a third alternative which home buyers may prefer if they want the advantages of both options. Here, you pay a fixed rate on a part of your loan while the rest is set at a variable interest rate.
How much should I borrow?
Knowing how much you should borrow is another crucial part of the home loan process. A qualified mortgage broker can help you work this out, and there are also online calculators available to help you factor in expected costs.
What you borrow will be influenced by the amount you can afford to make in repayments, how much a lender will loan you for the property and other factors.
What features do I need?
There are plenty of home loan features available, so it's essential to consider which ones you really need. Whether it's a redraw facility, an offset account or a split rate, an experienced mortgage broker can help you structure your loan suitably.