Q: What are the best types of home loan and how much can I borrow?
A:
- Variable rate home loans – are one of the most popular types of home loans in Australia. With a variable rate loan, your interest rate can fluctuate over time, depending on market conditions. This means that your repayments may increase or decrease over the life of the loan. However, variable rate home loans often come with more flexibility than other types of loans, including the ability to make extra repayments or pay off the loan early without penalty.
The amount you can borrow with a variable rate home loan will depend on a range of factors, including your income, expenses, and credit history. Typically, lenders will allow you to borrow up to 80% of the property value.
- Fixed rate home loans – are another popular type of home loan in Australia. With a fixed rate loan, your interest rate is locked in for a set period of time, usually between 1 and 5 years. This means that your repayments will remain the same for the duration of the fixed period, making it easier to budget.
The amount you can borrow with a fixed rate home loan is similar to a variable rate loan, with most lenders allowing you to borrow up to 80% of the property value.
- Split rate home loans – a combination of a variable rate and a fixed rate loan. With a split rate loan, you can split your loan into two parts, with one part on a fixed rate and the other on a variable rate. This gives you the best of both worlds, with the security of a fixed rate loan and the flexibility of a variable rate loan.
The amount you can borrow with a split rate home loan will depend on the lender, but most will allow you to borrow up to 80% of the property value.
- Low deposit home loans – If you’re a first-time home buyer or don’t have a large deposit saved up, a low deposit home loan may be the best option for you. These loans require a smaller deposit than other types of loans, typically around 5% of the property value. However, low deposit home loans often come with higher interest rates and fees than other types of loans.
The amount you can borrow with a low deposit home loan will depend on your income, expenses, and credit history, but most lenders will allow you to borrow up to 95% of the property value.
