Are you looking at options for a home loan? Not sure whether a mortgage, construction loan or refinancing is your best option? There are a lot of different home loans to choose from and it can get confusing so here is a closer look at some of them and what you can use them for.
Seven home loan options
- A traditional mortgage – This is what you take out to purchase a home that already is built. A lot of people wisely choose to use the services of an expert mortgage broker Sydney to get the best possible deal on a loan. Just be aware that it is never a good idea to get 100% financing, at least try for a 10% down payment, or better.
- Refinance loan – This next type of home loan is one people often choose in order to pay off a large debt, to consolidate debt, to make major renovations on your home or to take advantage of lower interest rates. Usually, a refinance loan is between 80% to 90% of the home’s value.
- A second mortgage – A second mortgage is similar in many respects to the refinance loan, but you can get more money. Where the refinance was 80% to 90% of the house’s value, a second mortgage can get you 100% of the value and even sometimes up to 125%. This should only be done when you really need to though as you are likely to pay higher rates of interest and you are tying up your equity.
- A construction loan – This is a great short-term loan option for people who are looking to have their next home built. There are several stages of funding as the construction takes place so the next amount is released at each set stage. It is a great way to open up the option of being able to have your dream home built even when you do not have the finances yet to do so. It will take about a decade after the construction loan for the home to appreciate in value to the loan amount.
- First time buyer’s loan – This is just another type of purchase mortgage but it is specifically for the buyers who are first timers. The terms and such are specifically aimed with first timers in mind.
- A home equity loan – Similar to a second mortgage this type of home loan is more for people who are looking to get a smaller amount of money for whatever reason.
- A line of credit – This is like a credit card but is in the form of a revolving account where your home is the collateral.
Above are seven of the different home loan types you can consider and decide which is the best for you. When you have a better idea of what you can look for it also helps to focus on which experts can best help you. Any kind of mortgage for example, you might look for an experienced and skilled mortgage broker Sydney to get you the best deal.