There are so many different loans out there in the market and it can be really hard to determine which, is the best home loan, for you amongst all the marketing noise.
Here is your RealRenta checklist to help you decide:
· Fixed Rate Loans
These loans give you certainty because you know up-front
what your annual repayment is going to be.
So once you know what you are going to receive in rent, you
can estimate if you are going to have a surplus or deficit and manage cashflow
There are some cons, many lenders will charge you a break
fee if you repay more than the fixed rate allows for and if you want to
refinance during the term of the loan.
· Variable Interest Rate Loans
This type of loans means your payments will fluctuate. You
could potentially benefit from interest rate reductions and if the loan has a
redraw facility, you will be able to redraw funds from any extra payments you
You can also choose a split loan with a mix of fixed and
variable interest rates.
· Interest Only Loan
As the name suggests, you won’t pay anything off the
principal with this loan.
So if the value of your property increases, you will have
equity but if the market flattens, you may not have any equity, apart from your
The good thing for
investors is that interest only payments are tax deductible.
· Offset Accounts
Offset accounts allow you to use your mortgage as an offset
account with greater flexibility and interest calculated daily..
For instance, you could have your salary paid into your
offset account which is linked to your home loan.
The balance of your mortgage will be reduced by your offset
balance and you will pay less interest over the long term and you will still be
able to withdraw your cash when you need it.
It is worth noting that most offset accounts are linked to
variable rate loans rather than fixed.
· Lines of Credit
This loan allows you to use the equity in your existing
property to secure your investment loan.
Rather than receiving a lump sum, you can access as much of
the loan as you need.
This kind of loan does require some financial discipline.
Need a property loan?
Worried about negative equity?
Contact us @ email@example.com and
we will arrange for our Jon our trusted broker to contact you for a no
Thursday, 15 August 2019