Q: How often do I make home loan repayments?
A: It depends. There are a few factors that can affect the frequency of your repayments, including the type of loan you have, the lender you choose, and the repayment schedule you agree upon.
Q: What are the factors to consider for loan repayment?
A:
- Type of loan
There are two main types of home loans in Australia: principal and interest loans and interest-only loans. With a principal and interest loan, you make regular payments that include both the principal (the amount you borrowed) and the interest (the cost of borrowing). With an interest-only loan, you only pay the interest for a set period of time, after which you’ll need to start paying off the principal as well. The repayment frequency may vary depending on the loan type, so make sure you understand the terms of your loan.
- Lender
Different lenders may offer different repayment schedules, so it’s important to shop around and compare your options. Some lenders may allow you to choose how often you make repayments, while others may have a set schedule. Keep in mind that some lenders may charge fees for certain types of repayments (e.g. weekly or fortnightly), so make sure you understand the costs involved.
- Repayment schedule
The most common repayment schedule for home loans in Australia is monthly, but you may also be able to choose weekly or fortnightly repayments. Some lenders may even offer bi-weekly or quarterly repayments. Choosing a more frequent repayment schedule can help you pay off your loan faster and save money on interest over the life of the loan. However, it’s important to make sure you can afford the increased frequency before committing to it.
