Finding the right home loan is a personal decision, and it’s hard to get an honest answer without being on both sides of the equation. That won’t stop us from asking these questions: Does your financial situation need you to lock in? Is there any chance that rates will go down even more soon after taking out this new mortgage – do you think now might be the best time for fixed-rate mortgages before they increase again?
As always, with such big decisions as fixing or going variable, it’s worth getting advice from our experts at Lenders Direct – we have been dealing exclusively with lending since 1997!
Difference Between Fixed vs. Variable Home Loans
Weighing the pros and cons of a home loan can be difficult. Some people prefer to fix their interest rates, while others find that traditional variable loans are more beneficial for them in terms of flexibility with monthly payments.
The decision about what type of mortgage is best for you will depend on your individual needs; however, it’s essential to keep two things in mind when choosing between fixed or variable mortgages: how much money you’re able/willing to put down as collateral and whether there has been an increase (or decrease) in property values near where you live lately.
What are Variable Mortgages?
Australian home loan customers have traditionally preferred variable-rate mortgages due to the sheer number of mortgage options available to tailor their choice based on personal needs. Variable rates are prevalent because of flexibility and affordability, as borrowers may choose a lower interest rate with higher payments or opt for an adjustable term depending on what is most suitable for them in terms of budgeting.
In Australia, people prefer variable loans over fixed ones primarily because there seems to be something explicitly tailored towards any prospective borrower’s need: low monthly payments and high eventual payback balances or vice versa!
Benefits of Variable mortgages
Mortgages are set up to have variable interest rates, meaning the rate of your mortgage payment could change over time. It can be a great thing because it means you’re paying back less than what you owe in tough economic times and more when things get better.
- Flexibility – You could save some cash by choosing the variable mortgage option, and you may find that it is a better choice for your circumstances. One of the benefits to this type of loan structure is flexibility in terms of interest rates because they are based on market-driven changes; however, there can also be risks associated with these loans as well such as an increase or decrease in home values which will impact what amount you owe when refinancing. Flexibility regarding payment options within 30 days should not affect decision-making either way, but many people mistakenly believe paying off their balance faster means quicker success out from under debt.
- Freedom – People with variable mortgages have the freedom to choose if they want their payments to be higher or lower based on what is best for them. They can also change loans without penalty, which means people like you and I can make sound financial decisions when purchasing a home that we otherwise would not think about due to our fear of being penalised by high-interest rates and fees.
Disadvantages of Variable Mortgages
Variable mortgages are a risky type of loan because the interest rates can change at any time, and there is no way to predict when these changes will occur. These unpredictable adjustments make it difficult for borrowers who want stability in their monthly payments. The unpredictability also makes budgeting more challenging since you never know what your next pay-check might look like or how much money you’ll have left after paying other bills such as rent and utilities.
Variable Mortgages offer several advantages over traditional fixed-rate loans, but there’s always some risk involved too. For example, if rates go up or down precipitously, then your monthly payment could suddenly double without warning!
What are Fixed Mortgages?
We all know that many people look for a home to fix it up and make improvements independently. A fixed-rate mortgage allows them to have affordable monthly payments, so they can afford both living in their new place and improving upon it without worrying about accumulating more debt over time. If you’re looking for this type of opportunity yourself – or if your current lender offers but isn’t very flexible when it comes to refinancing rates – then take some time today to explore what we might be able to start doing together!
Fixed Mortgages are home loans that require you to make a set monthly payment for the duration of your loan. Fixed mortgages allow homeowners to budget their mortgage payments easier and can be good when interest rates are low because they provide stability in repayment plans.
Benefits of Fixed Mortgages
Let’s talk about the benefits of fixed home loans. The first and most notable benefit is knowing exactly what your monthly payment will be, year after year.
- Adjustable Terms – Fixed-rate mortgages may not always offer the lowest interest rates because they are a long-term commitment without any credit check or flexible terms. Still, if you plan on living in your house for at least five years, then this type of loan could work well with your budgeting needs.
- Affordable – The most obvious benefit to a fixed loan is that it’s the same amount every month, which can be helpful for those who have no idea how much they will make in one year. Fixed loans also provide peace of mind because you know your monthly payment won’t change while the interest rate stays at a reasonable level- even if rates go up or down during this time frame.
Disadvantages of Fixed Home Loan
If you’re one of the many people who want to own a home but don’t have enough for an initial down payment, or if your credit score is below average and this has prevented you from getting approved by conventional lenders in the past, then consider applying for a fixed-rate mortgage.
A downside to these loans is that they often come with higher interest rates than adjustable mortgages because their repayment periods are shorter on average. The other thing about them which may make prospective homeowners uneasy at first glance is what happens when inflation increases over time? Well, thankfully, there’s no need to worry about such things as long as we keep it under control!
With so many home loans out there, it can be hard to decide which one will suit you best. Speak with a mortgage specialist today and find the loan that is perfect for your needs. We’ll go over all of your options before getting pre-approved when you are ready!