Australian Home Loans market is soaring. The prospect of owning a home in Australia is lucrative, and many people prefer to go for mortgages or take out loans so they can invest in buying a property. Whether you are a first-time home buyer looking for a loan or you want to learn about the different loaning programs, here’s a brief on the types of loan programs you will find in the Australian home loans market.
Different kinds of loans for homeowners are available in the market. It’s time to find out the best options below.
Home Equity Loans
A person who is paying off his mortgage loan for quite some years builds home equity. So, he can tap on this equity and get a new loan. This secured loan usually comes with a low-interest rate. You must know that your home equity value is more if you have paid off your mortgage. It means you can borrow more money when you pay off your first home loan. Whether you have paid off a mortgage or not, lenders can offer you a percentage of home equity value as a loan. If your home equity value is $12000, you won’t get the same amount as a loan.
Typically, when you acquire this loan, the lender pays you the full debt amount and pays him back with a fixed monthly installment.
Home Equity Line of Credit
Another option of a loan you can get is HELOC. This loan works exactly like your credit card. The lender sets some limit on your loan amount, and then you use the money and pay it back. This loan facility lets you borrow money against your home equity value. You can tap on this option — whether you have completely paid off your mortgage or still paying some installments. Either way, you can secure a reasonable interest rate.
However, when you have paid off your first mortgage and then use your equity value for a loan, the rate will be lower. It’s because your lender will become the first lien-holder on the home. In case of default, he will pay first for the loan amount. As his risk is lower, he won’t mind offering you a loan of a low-interest rate. These are the two best loans for homeowners available in the market. You can opt for one that seems the most suitable pertaining to your requirements.
