| If you are currently looking for a new home, chances are that
in all the excitement you won’t really give any thought to
the type of home loan mortgage
you take out, instead going with the first one offered to you. This
could be a serious mistake – costing you thousands, if not
tens of thousands. Make sure you know all about the different types
of home mortgage loans before you starting looking for that new
dream home!
Here are some of the basic types of mortgage
loans:
Fixed-rate home loan mortgage -
As the name suggests, this is a plain-vanilla home loan. Basically
you borrow a certain amount over a certain period at a fixed rate
of interest. You then pay the same monthly installments for the
life of the home loan. The benefit of a fixed-rate home loan is
that you can easily budget for the repayments. The downfall of
a fixed-rate home loan is that you could end up paying a higher
rate of interest than everyone else – no one knows what
interest rates will be in 15-20 years time!
Adjustable-rate home loan mortgage -
Mirroring the fixed-rate mortgage is the adjustable-rate mortgage.
Again, you borrow a certain amount over a certain period, however
in this case the interest rate is not fixed, but is adjustable
(or ‘floating’ as you may also hear it called). The
upside to adjustable-rate home loans is that the interest rate
at the start of the loan period can be lower than the fixed rate
would be. The downside is that it is difficult to budget for,
as the amount can change, and you are at the mercy of something
outside of your control – interest rate fluctuations, which
can change quickly.
Hybrid home loan mortgages -
Trying to fill the void left with the downside of the fixed and
adjustable/variable-rate home loans, the hybrid home loan lets
you fix the interest rate over the first part of the home loan,
and then switch to an adjustable/variable rate later. The upside
of hybrid home loans is that they allow you to budget for your
repayments during the expensive time when you first buy the home.
The downside is that if floating rates are much higher than your
fixed rate when the switch happens, you could find you are paying
a much higher repayment each month.
To see our list of recommended mortgage
lenders with competitive rates for refinance, purchase loans,
second mortgages, home equity loans and all other mortgage loans,
visit the recommended mortgage
lender page. 
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