It is like choosing between a thoroughbred and sturdy horse. First will run extremely fast (up to 38 miles per hour) but will get dried after a few minutes. The latter will run for long but not in great speed. Choice is an illusion here.
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Convenience of fixed rates
If you have an impressive credit history and good line of credit, you will get great service from banks and may be eve n loan at prime rate.However that is not the case normally, whether in Australia or anywhere else. Fixed rates imply that your interest rates will be same as current for the entire period. Your time and payments are all definite and calculable. Your upfront payment and chares are increased here. If ongoing rates are within limits, it is ever wise to go for fixed rates.
Why the dilemma?
You may be in the middle of recession and assume that rates will fall down further. However, since home loans run for more than ten years in general, it will go up for sure in later future and all your calculations go haywire. Unless you have stupendous strategies to adopt like debt consolidation and mortgage refinance, and have too much equity to play with, floating or variable rates will be inconvenient for you.
Which is better for short-term and long-term?
Variable rates are preferable for short term if you pick it at a time you know the interest rates are liable to fall down. You also end up paying less processing fee and upfront charges. Bankers underwrite future risk of lower rates later on and generally increase starting rates. You can speculate using time and fluctuations. However you will end up a winner in case of short term home loans.
Vice versa, if you opt for sizeable term loan, you should intelligently opt for fixed rates. Banks prefer refinancing clients who have adopted fixed rates. You also know exactly what to pay and for how long. You can plan and make foreclosures.
For salaried employees
Generally people with noted and guaranteed income have the management skills to regulate their money. They need a synopsis of coming expenses and run their lives accordingly. Fixed rates are their pet for home loans.
For variable earners
Those who are self employed, part-timers or those involving in speculations and shady business should always opt for variable loan they do manage to get loans. Otherwise, the burden of paying a said amount every month will hang like an albatross on their necks.
Talk to mortgage operators
Mortgage operators will calculate . They will suggest you odds and ends on when to go for home loans and for what period. When will it be suitable to go for refinancing or debt consolidation? There are some very reputed home loans operators in Australia with wise ideas and moves.
You may also opt for split rates staring with fixed and ending with variable or vice versa. Just keep your financial status and credit profile in mind.
Not all home loans are the same
Just like your fingers, many things in life come in different sizes. And when you talk of money, chances go green. Home loans are not monotonous and come in different patterns too
How to choose a better home loan
Fixed or floating!If you are a speculative guy, you can go for fixed rate loans. This will remain fixed even if current rates ebb or flow. To counter any discrepancy, these rates are generally kept on...
Mortgage refinance for newbies
If you have been involved in making payments on your mortgage, and suddenly think about buying a dream first home, here is how to do it. There are financial institutions and banks in Australia that allow mortgage refinance for first home buyers. If you have proper paperwork, a compact credit history and mind set to go for home loans, mortgage refinance is very much available.
