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Save on interest costs and have the ability to keep repayments low.
With a deposit of less than 20%, a Low Equity Margin or Premium will apply depending on the bank. As this margin can be a considerable extra cost it's ideal to have it removed as quickly as possible. This means reviewing your new homes value and homeloan amount after a minimum 6 months.
- Details
- Examples
Rates Structure
Benefits
- Short term allowing Low Equity margin to be reviewed after 1 year with intention to remove this to save future interest costs.
- Generally the lowest interest rates on the market saving on interest costs and ability to keep repayments low.
- Shorter fixed commitment allows to adjust to homeownership and new expenses associated with this. Can manage finances and put a monthly budget in place and then reassess to increase repayments to reduce homeloan amount once adiusted.
Disadvantages
- Short term rates do not give Iong term stability in regard to interest rates and repayment amount.
Full Description
With a deposit of less than 20% a Low Equity Margin or Premium* will apply depending on the bank. This margin applies for the full fixed rate period chosen for the portion of the homeloan. As this margin can be a considerable extra cost it's ideal to have it removed as quickly as possible. This means reviewing your new homes value and homeloan amount after a minimum 6 months.
Fixing short term gives the ability to review this. However 6 month rates are generally considerably higher than 1 year rates and there are often 1 year as good time to reassess.
Comparing the interest costs on the homeloan calculator between floating 6 months and 1 year is recommended.
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FAQs
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