Guide to Mortgages in Australia - Part 5

This is the fifth article in a series of articles on home loans in Australia. Here you will find some up to date mortgage news and some information that will help you choose the right mortgage for your home. This article continues with an analysis of the different products available today.

Honeymoon Rate Mortgages

One type of loan that is suited to people buying their first home is a honeymoon rate mortgage. This type of mortgage offers a low initial rate of interest which can help reduce your monthly payments in the first crucial stages of home ownership.

By reducing the interest rate for a set period of time at the beginning of the term of the loan, you can give yourself some breathing space. Reducing your monthly repayments when you first move into a house and most likely have very little spending money aside can be a welcome relief.

Be aware that the rate will go up after the honeymoon period is over. This can greatly affect how much money you need to survive each month. Be sure to check that you will be able to make your payments at the higher rate before you sign up for the loan.

This type of home loan can also come with hefty fees. These fees can be charged at the beginning of the loan period or when the introductory rate expires. You must make sure that the fees do not cost more money than you saved in interest during the honeymoon period. If this is not the case then it might not be worth applying for an introductory rate mortgage.

Conclusion

There are many different types of mortgage products available in Australia today. Since deregulation of the financial market the home loan market has benefited greatly. There are now more lenders in the market than ever before and this has created a competitiveness that has benefited borrowers.

With so many competitors out there, lenders have to offer flexible options to win new business. As we have seen, these flexible options include lines of credit, draw down facilities and packages of mortgages and other loans together. Another flexible option with a high take up rate is an offset account.

There is also greater flexibility than ever before with interest rates. Borrowers can now choose between fixed rate products, variable rate loans, and mortgages that have low introductory rates. Even standard products have good interest rates these days because there is so much competition.

Investors also have more access to credit than ever before. Investment mortgages also come with a variety of flexible options and relatively small deposits are required by lenders these days.

If you are building a house, there is also a good range of construction mortgages on offer. Borrowers who wish to build their dream home are no longer restricted to borrowing money from their local bank branch.

As you can see, the Australian mortgage market has come a long way in recent years. If you are looking for home finance, there should be a product to suit your personal needs.

Read the latest Mortgage News and stay in touch with the home loan market at http://www.moneynet.net.au/. http://www.moneynet.net.au/