Resi Info-grahic: Super Dependable vs. Super Flexible

By the resi financial blog team, 23 March 2014

Resi infographic

The world of home loans can be a difficult terrain to manoeuvre, especially for first-time buyers. There are a wide range of different products and facilities that need to be looked at and understood during the initial search process in order to ensure you secure the best possible mortgage option for your needs.

Regardless of whether you're interested in buying your first family home or you're in the market for potential investment opportunities, the basics of home loans remain the same. There are two main types of mortgage you'll encounter - each with its own strengths and weaknesses.

The differences between a fixed-rate home loan and a variable-rate home loan should be factored into your overall approach towards the real estate landscape. Taking these things into account will help you find the right mortgage option for you, one that conforms to your long-term property plans with ease.

Fixed-Rate Home Loan

If you're a young family or first-time buyer looking for a safe, secure mortgage product that you can rely on week in and week out to remain the same, a fixed-rate home loan is the best option to consider.

For a fixed period of time - usually between three and five years - your home loan interest will be set at a certain level. The benefits of this include giving you peace of mind by knowing that your weekly repayment amount will always be the same. This can help you budget for the future and provide stability for your payments, as well.

Furthermore, being locked into a certain interest rate provides you with protection from fluctuations in the economy. If you managed to secure a competitive fixed-rate home loan, you could find yourself making comfortable repayments in no time.

Variable-Rate Home Loan

The second most common type of home loan in Australia is a variable-rate, which works in a different way to a fixed-rate mortgage. Unlike a fixed-rate home loan, a variable-rate product doesn't have a set interest repayment percentage.

This means a less structured repayment schedule that can be affected by fluctuations in the wider economy. This can be great for property investors or those observing the financial climate of Australia
One benefit is the potential for lower interest payments if national interest rates drop. This is something fixed rate holders cannot take advantage of due to their contract. However, the opposite is also true - if interest rates rise, so too will your repayments.

Furthermore, variable-rate home loans tend to be more flexible in the long run, with a wide range of different facilities and features that can be added on to alter your home loan experience and potentially benefit you in the long term.

Categories: ;Personal, Finance;Property, Home Loans, Investment