Having your own home is a dream for everybody. But not in todays scenario ! Having a home is not a dream anymore, you can afford a home with a home loan on easy installments. Borrowers also make use of it for home improvements, consolidating their existing debts, to buy basic amenities or for any other personal purpose. Home loans are offered as per calculation of the equity in ones home. Equity is the value of the home after deducting outstanding home loan mortgage amounts and other loans. Various factors that lenders take into consideration while calculating the home equity are location of the home, the structure etc. There are various loan types available in the market such as, lets have a glimpse of some types:
Basic or no frills loans
These are the variable rate loan with a low interest rate. Which means you can pay off the loan faster with relatively low interest rate. If the interest rate falls, so your minimum repayments. Generally they are suitable for the first home buyers because of low rate.
Standard variable rate loans
These are same as the basic home loan but it offers a few more features and flexibility, which makes the home loan rate slightly higher. The main advantage is that if the rate falls simultaneously your minimum repayments reduces. However, it is a good idea to keep repaying at old installments and pay off the loan faster. It is suitable for all, from home buyers to those who need refinancing and also who want some flexibility. Fixed-rate loans
The interest rate is fixed for a particular term usually one to five years. So the installments are made accordingly. Once your fixed term is over, you can change to another fixed rate, switch to variable or go for a split loan. This gives security of knowing exactly what your repayments will be and you can budget accordingly. This is suitable for those who are worried about rates rising. Equity line of credit loans
Home equity loans are offered as per calculation of the equity in ones home to finance other things such as renovations or to invest in other assets such as shares or funds. Its advantage is that extra funds are there when needed without having to apply for a separate loan. This loan type is suitable for those who are thinking about renovating or investing.
Bad Credit Loan
It is a kind of home credit loan used for paying off mortgages that have high interest rates and to refinance. They can be used for equity loans, personal loans, payday loans, and home improvement loans. They are the best way to rebuild your credit score and to get financial aid to take care of personal needs.