When it comes to home loans, there are two main types: variable and fixed. Each option has its own set of pros and cons, so it can be difficult to decide which loan is right for you. In this post, we discuss the pros and cons of both loan types so that you can make an informed decision about which one is right for your needs.
Variable Home Loans
Variable home loans offer borrowers the ability to make lower monthly payments. This is because the interest rate on a variable loan can fluctuate, and it is often lower than the interest rate on a fixed loan. However, there is also the potential for your monthly payments to increase if the interest rate goes up. Another con of variable home loans is that they can be more difficult to budget for, since you don’t know how much your monthly payments will be.
Fixed Home Loans
Fixed home loans offer borrowers the stability of knowing that their monthly payments will not change, no matter what happens with interest rates. This can make it easier to budget for your loan repayments. However, the interest rate on a fixed loan is often higher than the interest rate on a variable loan, which means that your monthly payments will be higher.
So, which loan type is right for you? It depends on your individual circumstances. If you are someone who likes to know exactly how much your monthly payments will be, then a fixed home loan might be the preferred option. However, if you are comfortable with a bit of uncertainty and are willing to take the risk that your monthly payments might increase, then a variable home loan might be the right choice.
If you’re not sure which loan type is right for you, speak to a mortgage broker. They will be able to assess your individual circumstances and provide you with expert advice about which loan type is right for you.
