Buying guide
What are home loan interest rates and how do they work?
A quick and easy guide.
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AI summary
Understanding home loan interest is crucial when buying a house. It's the cost of borrowing money, influenced by factors like the Reserve Bank's Official Cash Rate (OCR).
You can choose between two main types:
- Fixed rate: Locks in your interest for a set term, providing repayment certainty but less flexibility for extra payments.
- Floating rate: Moves with the market, allowing lump-sum payments without penalty but offering less predictability.
A split loan, combining both fixed and floating portions, is also an option.
What you’ll learn:
What are home loan interest rates, and why do banks charge them?
You need to be aware of home loan interest rates when budgetting for your home.
How are mortgage interest rates calculated?
You'll need to decide if you'd prefer a fixed or floating interest rate.
Fixed and floating interest rates explained
Floating interest rates
Fixed interest rates
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