There are different home loans types available for different types of borrowers in Australia.

When the time comes to decide on which home loan to choose, you may be faced with more options than you thought.

From variable to a line of credit, even split rate loans, there are many options available to you.

While a great mortgage broker can help you navigate the options to suit your specific circumstances, it can be helpful to gain an understanding of the options yourself as well.

Here is a breakdown of the different types of home loans available to get your research started.

Variable Rate Loans

This could be one of the most common loans for homeowners. A variable rate loan relies on the cash rate set by the Reserve Bank of Australia. This basically means that if the cash rate varies, so will the repayments of your home loan as your loan’s interest rate will either increase or decrease depending on the change.

While this may not suit everyone, this type of loan often allows you to make extra repayments or add an offset account.

Fixed-Rate Loans

This type of loan allows you to lock in a set interest rate for a certain period of time. This allows you to plan and know exactly how much your repayments will be and that it won’t change if the Reserve Bank of Australia’s cash rate changes.

Many lenders will only allow you to fix for periods of up to five years, after that it will automatically revert to the variable interest rate.

Slit Rate Loans

This type of loan allows you to have both variable and fixed-rate loans, by splitting your loan into essentially two separate loans. You are able to fix one portion of the loan whilst setting the remaining amount as a variable. You can even choose how much you would like to allocate to both.

Guarantor Loans

A Guarantor loan allows you to ask your parents or other family members to be your guarantor and use a portion of their own home as a security measure for your mortgage.

This type of loan is often used if you’re looking to borrow more than 80 percent of the purchase price, but want to avoid lenders mortgage insurance. It could also be helpful if you’re a first home buyer as it may give lenders more confidence in approving your loan.

Low Doc Loans

Also known as ‘low documentation loans’, this is a perfect fit for freelancers, business owners, or self-employed people who don’t have some of the standard papers such a payslip usually used to apply for home loans.

Instead, an income declaration and other financial statements, such as bank statements and business activity statements (BAS), can be used to assess the credibility of the borrower. However, these types of loans can sometimes carry higher interest rates and fees.

Line of Credit Loans

If you’re looking to make renovations to your house, you could get a line of credit loan on top of your current mortgage. This enables you to take advantage of your mortgage to pay for other things. But the amount depends on the equity you have on your property.

Non-Conforming Loans

This type of loan is often used by people with a poor credit history, or have been unemployed for some time. It allows these people to use other evidence, similar to a line of credit loan. However larger deposits are often needed and higher interest rates may be offered to mitigate the risk to the lender.

Bridging loan

Bridging loans can help “bridge” a period of time when you’re between two mortgages. For example, you are still selling your current home, when you purchase a new home. Technically you would have two mortgages, so you can apply for a bridging loan in the meantime.

The minimum repayments on a bridging loan will generally be calculated on an interest-only basis, and in many cases, this interest may be capitalised until the existing home is sold.

Why consider using a mortgage broker as a first homeowner?

A mortgage broker can be a great way to ease the home buying process and save. Sunshine Financial is the better option if you’re a first home buyer looking for a mortgage broker in sunshine coast.

As a first home buyer, you’ll want to make sure you start this exciting process on the right foot.

In today’s digital world, it might be easy to rely on Dr. Google for your research, but we’re here to remind you that there are still real people out there – like mortgage brokers – ready to help you start your journey.

Mortgage brokers are professionals who provide financial advice to people planning to buy a home. They can guide you through the entire process, complexities and all, and take the stress out of any rigorous lending processes.

Here are some of our top reasons why you should use a mortgage broker as a first home buyer.

They will arrange your pre-approval

One of the first things you may want to do is to get a pre-approval. This will allow you to have confidence when shopping for your dream home, knowing how much you can afford to borrow.

A great mortgage broker will speak to you about your specific needs and circumstances and work out how much you can borrow and take the next steps to get the loan pre-approved.

If the loan amount wasn’t as high as you hoped, or your credit score is affecting your borrowing capacity, a mortgage broker can work with you to settle other financial obligations to put you in the best position to borrow for your home loan.

It won’t cost you anything for the service

First homeowners are often surprised that yes, using a mortgage broker won’t cost you a cent. Mortgage broker receives a commission from the lender you choose to go with, only after your home loan is approved and processed.

In saying that it’s always a good idea to check with the mortgage broker you engage to see if there may be any other services that they charge for, but often this is not the case.

They will save you money

Because mortgage brokers have access to many different lenders and types of home loans, they will be able to work out which is also the most cost-effective option for you.

Mortgage brokers are not aligned with one bank or lender, so finding the lowest interest rate, or home loan features is their priority, not the lender. By having a range of lenders are your fingertips you could save literally thousands of dollars over the course of your loan by choosing the right home loan.

Some mortgage brokers may even have access to special deals that aren’t available to the general public yet.

The loan application process will be stress-free

Let’s face it, applying for a mortgage often comes with a lot of paperwork. A mortgage broker will oversee this process, even checking your documents for mistakes. Not only will this save your sanity, but also your time.

Speaking of time, it takes time to assess the multiple options of home loans available on the market today. A mortgage broker is experienced in the range of home loan options and can explain your options quickly and easier, saving you the hassle of having to spend hours researching multiple lenders and banks.