If you are planning to buy a home soon, then you may be busy comparing the types of home loans (i.e. variable and fixed rate home loans) made available for borrowers. The kind of home loan you end up selecting can have deeper impact than what you can think of. Home is more than “just” the place where you live. When you are buying a home, a few of the common factors generally considered by you are:
- Proximity to your workplace or your kids’ school
However, you should never forget the fact that the resale potential of your home is primarily determined by its developmental prospects as well. The type of loan you end up taking will determine how well you are able to maximize the potential of the property. There are several flexible home loan options and it is always judicious on the borrowers’ part to sit down with their mortgage broker to scrutinize unique circumstances and then settle for an option in accordance to their needs. Today, we will be focusing primarily on variable home loans. When do you think variable home loans turn out to be the right option? Which borrowers are the ideal candidates for variable home loans? Let us discover in this post.
Should you choose fixed or variable home loan?
When it comes to selecting variable home loans, a lot depends upon your ability to predict the rate movements in market. When you are securing a variable home loan, you should be prepared to pay rates in accordance with the market rates. For instance, when the market rates plummet, you will be paying reduced rates. However, when they increase, you have to pay higher rates of interest. So, if you are able to predict the movement of the market rates at least for a few years down the line (when they will plummet or shoot up), you can determine whether it would be prudent for you to settle for variable loans or not. For instance, you can sit down with a home financing expert while you are checking out the available variable rate home loans from Newcastle Permanent. He/she might have the required knowledge about the fixed and variable rates in the market and advice whether it will be prudent to select variable home financing or not.
Are you taking advantage of the reduced rate of interest? Why should you consult a home financing expert?
There are several borrowers who find it irksome when they cannot take advantage of the reduced rates as they have chosen fixed home loan fearing that the rates will shoot up in the near future. While their fears cannot be ruled out completely, it is indeed very annoying to discover that you cannot cash in on the substantial reduction in rates (if there is any). Borrowers, as such, remain very confused as to which option they should end up settling for. Here is where a home financing expert helps. One of the best ways to reflect on the future movement of rates is to study the present movements closely. As a layman, you might be too confused with all the statistics but the home financing expert will not be so. Not many borrowers out there consider turning to a home financing expert when they are borrowing. Make sure you are not committing similar error.