Are you interested in real estate in Surfers Paradise? If so, it's probably time to consider your home loan options. There are two principal mortgage rates – variable or fixed. Which system you choose will greatly determine your repayments in the future, as each approach has its individual merits and pitfalls.
This means they can be ideal for some borrowers, but absolutely inadequate for others, depending on the kind of Main Beach real estate you're after. Thus, it would make sense to do some research on the matter and figure out what kind of home loan would suit your circumstances.
If you're yet to purchase your first home or investment property, you'll probably be entering the world of finance and home loan repayments relatively blind. Fixed-rate home loans are a great way of removing a lot of the stress, providing more stability and security with your finances in the process.
Perhaps the foremost advantage of using a fixed-rate home loan is the ability to confidently budget your spending. As you will know exactly how much you're required to fork out for each mortgage repayment, you will be better equipped to plan out your financial future. No need to worry about any unexpected surprises!
Furthermore, because your repayments are fixed, a sudden rise of the interest rates in the market will have no effect on you. The payments for your Surfers Paradise property (during the set fixed period) will stay the same regardless of any negative activity in the economy.
While this kind of home loan is ideal for buyers seeking stability, they can be restricting for borrowers who are looking for flexibility. Many of the resources that can transform your home loan into a wealth generating facility are unavailable to those working with a fixed-rate mortgage.
The ever-changing Australian economy will have no influence on your repayments. However, this means that even if interest rates fall, you will continue to pay your escalated fixed rates, which can be frustrating.
They're called fixed for a reason. While it is possible to end your contract before the set date with the aim to refinance to a better deal, the banking fees for this can be quite lofty.
Just like the name suggests, these rates can chop and change as the wider economy ebbs and flows. Variable-rate home loans are popular amongst investors and those who are experienced in the property market. This is often because they're prepared to deal with higher payments in the short term because they can eventually benefit from potential savings in the low periods.
Another incentive for investors is the ability to add an array of features to these mortgages to aid wealth generation. Among others, these include offset accounts and redraw abilities that can assist your capacity to make money from your investment.
With so much of your financing tied up in the whims of the economy, there is the possibility of finding yourself in a squeeze if there is a significant slow down. While it may mean studying the market becomes a full-time job, it could be worth it in the long run as you will be able to set up safeguards for any possibility.
If you're interested in Main Beach real estate, talk to the team at Ray White. With years of experience, we can give expert advice and guide you through the whole process of buying a home or investing in property.