There is a sense of growing-up when you begin discussing mortgage rates with friends, but what exactly does fixed or variable interest rates mean for you on a daily basis? Like all home loans, we know we have to pay it off but how the rates are set and when we make payments vary from lender to lender. Here is a bit of an overview:
How are mortgage rates set?
Mortgage rates are the interest rates that a financial institution advertises to borrowers seeking to take out a mortgage. The rates will differ between mortgage lenders and will ultimately help in the final decision made by the borrower. The lower the mortgage rate the lower the mortgage repayments will be and the more you will save.
What are the loan type?
- Fixed mortgage: If you fix your interest rates you will be guaranteed that your repayments will remain the same for an agreed period of time.
- Variable mortgage: The rates generally follow the Reserve Bank of Australia’s official cash rate so your repayments will rise or fall with the rest of the Australian market, but are generally lower than fixed rates.
- Low Doc home loans: These home loans are provided for people who cannot provide the normal required paperwork to apply for a loan. This mainly covers the self-employed.
- Introductory rate: A lower interest rate is offered for a set introductory period to help people get into the Australian home loan market. The rate will revert to a higher rate after the introductory period expires.
How often do I pay my mortgage repayments?
- Twice per month
What are the mortgage repayment types?
- Principal + interest
- Interest only
RateCity compares over 2000 home loan lenders to find the best mortgage rate for you, to find out some of today’s best mortgage rates, take a look at the home loan comparison table and calculate your mortgage repayments.