Choosing the right home loan isn’t a one-size-fits-all situation. Your personal finances, lifestyle, and even how you feel about money can all shape the type of loan that’s best for you. The key is to find home loan features that fit where you are in life right now.
Don’t Get Stuck in the “Set and Forget” Mindset
One common mistake many homeowners make is treating their home loan as a “set and forget” deal. Sure, you may have found the right mortgage when you first bought your home, but life happens, and circumstances change. Whether it’s a new job, growing family, or a shift in income, these events can mean it’s time to revisit your home loan and see if a new option would work better for you.
Your Loan Options: Variable, Fixed, or Combo Rate Loans
Before you start shopping around for a new loan or thinking about refinancing, it’s helpful to know your main options. The three most common types of home loans are variable rate loans, fixed rate loans, and combo rate loans.
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Variable Rate Loans
A variable rate loan gives you more flexibility. It’s great if you don’t want to be locked into one interest rate for a set period. With this option, you often can:
- Make extra payments without any extra fees
- Access funds electronically through redraw facilities
- Pay off your loan quicker if you’re able to make additional payments
A variable rate loan is a good choice if you want to take advantage of potential interest rate drops or have the ability to make extra payments.
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Fixed Rate Loans
If stability and predictability sound more like your style, a fixed rate loan could be the way to go. You’ll lock in your interest rate for a set period (usually between 1 to 5 years), meaning your repayments won’t change during that time. This provides peace of mind because you know exactly how much you’ll be paying each month.
Fixed rate loans are perfect if you like certainty and want to avoid interest rate fluctuations.
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Combo Rate Loans
A combo rate loan combines the best of both worlds: you get the flexibility of a variable rate and the predictability of a fixed rate. With this option, part of your loan has a fixed rate, while the other portion is variable. You can:
- Make extra repayments on the variable portion
- Enjoy the stability of fixed repayments on the rest
Combo loans are ideal if you like the idea of a little flexibility but still want some predictability in your monthly repayments.
Home Loan Features: Not Sure Which Option Is Best for You?
Choosing the right home loan features can be overwhelming, but you don’t have to do it alone. As an independent broker, we work with a variety of lenders, so we can give you independent, unbiased advice that’s tailored to your unique situation.
For personalised guidance, give us a call at 03 8393 1000 or book a consultation. We’re here to help you make the right decision for your future.
Hayley Crow is a Credit Representative (CR No: 486223) of Buyers Choice Licencing Pty Ltd ACN 626 172 281 (Australian Credit Licence No: 509484)
