Home loans are required by the individuals for buying real estate property. Home loans are the requirements of residential owners, first homeowners and real estate investors. They are also known as home mortgages.
The history of home loans in Australia can be traced back to 1911 when this concept was introduced by the neighbors to both New Zealand and Australia. From that time onward there have been a lot of changes made in the laws and regulations of debt management and financial markets.
There is a wide variety of offers in home loans products to accommodate the needs of different individuals. Standard variable loans, valuable loans, fixed rate loans, home equity loans and combine rate loans are worth mentioning.
Valuable loans have low interest rate and are available with limited features. They are flexible in nature and are suitable for borrowers who use no frill loans. Common home loan product is standard variable loan that is also flexible. It has various features like split loan option, extra payments and remove loan re-draws.
Fixed loan rate has a certain time-period and the customer has to avail the loan within this time frame. This period varies from one to two years. After the expiration of this term, the loan has a variable rate and can be renegotiated for another fixed term. This fixed interest rate is in the favor of the consumer and protects him from rising rates.
Combination loans have features of both fix as well as variable loans. A flexible rate is usually applied on the loan portion and fixed rate is also applied. This is also in the best interest of the consumer because it protects him when the interest rates are high and also benefits him when it is low.
Interest rates in Australia are determined by Reserve Bank of Australia also known as RBA. Interest rates are changed frequently to control inflation. There are different factors which contribute to its increase and decrease and these rates are also applicable on home loan mortgages.RBA sets the official interest rate of Australia. This rate varies on other kinds of loans but, has an influential impact on the mortgages as it is applicable directly on it.
Circulating credit can be accessed with the help of home equity loans. Borrower can get the loan against equity at low rates than interest rate charged on personal loans. In home loans, there is a revolutionary competition in the Australian market. Lenders are offering rates that are suitable for the consumers. This feature has made it a competitive loan market locally as well as internationally. There are different interest rates applicable on home loans. One of the reasons is the competitive loan market for mortgages in Australia. Home loans are of two types: standard variable rate and fixed variable rate home loans. There are various packages offered by home lenders. Few years back home lenders were facing loses due to diminishing buyers as big banks were offering loans at low interest rate. Australian government then, made policies to protect mortgage lenders in Australia.