Australia is among the countries with fastest growing economy and known to have a very expensive lifestyle. The price of a house in Sydney for example can already be compared to those houses in the UK and US. This is why most people in Australia depend on home loans in order to have a property they can own in a few years of paying the mortgage.
Mortgage could be one of the serious debts anyone would ever take in their life. It needs dedication in paying it so the property can be fully acquired after some time. It is very likely that the biggest percent of the money you earn is meant for paying your mortgage. This is not ideal as you may end up defaulting on the loan and not getting your dream home. This is why it’s very important to find the best home loan you can easily pay.
In this article, you can find ways to lessen the interest of your home loan for easier repayment.
- Offset account – An offset account is a savings account linked to the home loan that could help in saving money on interest and reduce the years of loan repayment. In here, the borrower opens a savings account (offset account) with the lender. Doing so, the interest for the loan will be calculated using the amount of loan or net balance less the amount in the offset account. This way, you save money on interest and get lower repayment for your mortgage.
- Fixed interest rate – This means that the interest rate for your home loan stays the same in the fixed rate period of the loan. Thus, you can accurately predict your loan repayments and don’t need to worry deciding in buying something or just saving the money as the interest might move up. If you want to feel secure in knowing exactly what you should pay, then fixed interest rate is good for you. In Australia, there are available fixed rate home loans from NPBS most borrowers opt for their loans that you might want to also check out.
- Additional repayments – You can make additional repayments whenever you can as this would also reduce the interest of your loan as well as the years you need to pay for it. You can do this with no penalty when you choose a variable rate repayment. The advanced or additional payments you made can be redraw if you need the money for some reasons.
It would be confusing to choose between a variable and fixed rate home loan as each offers good features like reduced interest. But you can always get the best as long as you assess your payment capability and how you make money.
And remember, the best key to having an affordable loan repayment is reducing the interest of your loan. There are many ways to do that like the ones mentioned above but you should still seek advice from an experienced mortgage broker to know how you can save on the loan interest and ensure you are only getting the best deal for your dream house.