The Different Types of Home Loans
When you’re applying for a home loan, you typically don’t think about what type you’ll be going for. There are a plethora of options available to help customise your loan to your needs. Your lender will typically have a few that they recommend after surveying your financial situation to really tailor your loan experience to suit you.
But what are all the different types of home loans and what do they do for you as a borrower?
These are becoming incredibly popular in recent years as it allows you to transfer your home loan from one house to the next. Many people find they don’t want to stay in the same home forever, so having a portable loan allows them the flexibility to transfer their mortgage when they head to the next place.
The interest rate on these home loans is flexible, meaning it can go up or down throughout the course of your loan. This is largely due to market factors as well as factors within your own financial situation. The good thing about variable rates is that they can trend downward, making your monthly payment a little bit lower if the factors line up. Most lenders have a cap on how high the interest rate can flex up as well.
The interest rate for these home loans is fixed, meaning it will stay the same for a certain period of time. This usually spans a few years so you’ll be able to have a consistent interest rate with no surprises. Some people prefer these as they can financially plan better knowing exactly what their interest rate is going to be for a few years.
A lot of investors tend to gravitate towards these loans as they only require you to pay back the interest on the mortgage. This is usually set for a certain period of time as well, but it allows investors and borrowers to have some financial freedom.
If you are constructing your dream home rather than purchasing something already built, you may qualify for a construction loan. This allows borrowers to pay out their construction workers in phases rather than paying an allotted sum upfront. Then you only have to pay out on the interest of what you’ve already paid so it won’t accrue.
These loans are gaining more popularity as they allow those who are self-employed and don’t have regular pay stubs to take out a mortgage. Low doc stands for low documentation, meaning you don’t have to provide much paperwork to be able to qualify.
At Mortgage House we offer several of these loans and more. We pride ourselves on providing quality customer service and tailoring our loans to your needs. Even if you aren’t sure what kind of loan you’re looking for, we can talk you through your options to find what will work for your situation. Use our mortgage calculator to start your loan process today.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s an exciting and very rewarding one. If you’re thinking of applying for a home loan, you can Apply Online today to get started!