type of home loans

choosing the best home loan and payment plan

Researching and finding out all the loan types is pretty straightforward, but there are so many different mortgage structures and loan repayment options that it’s easy to be overwhelmed. The art is knowing which type of home loan and what type of interest rate, or combination of interest rates, and repayment plan best suit your needs and provides you with peace of mind. This is where we excel. We won’t just get you a home loan, we’ll get you an awesome home loan!

There are so many different loan options and so many possible combinations. Our goal is to help you choose the best mortgage to suit your needs.

table loan

With a table loan your repayments are spread evenly over the term of the loan and stay the same unless your interest rate changes.

Most of your early repayments are mainly made up of interest. Over time this changes so that by the end your repayments are mostly paying back the principal. The “table” option on our mortgage calculator best helps understand how this works – http://www.awesomemortgages.co.nz/mortgage-repayment-calculator.

The main benefit with table loans is that regular repayments will keep you on track and your loan has a fixed term – so you know when it will be paid off.

If you fix your interest rate, rather than float, a key advantage you will gain with this type of loan is certainty, because you know exactly how much your repayments will be. Remember however that if you repay your loan early, there can be early repayment recovery costs to pay.

reducing loan

You repay the principal (the money you borrowed) on a reducing loan in equal amounts so more of your loan is repaid in the early stages.

Because principal payments remain constant your initial regular repayments are higher than other loan types but steadily decrease over time.

interest only loan

Interest only loans are ideal to cover short term situations. For example, you may need bridging finance while another home is being sold or for an investment property.

You only pay the interest on the money you have borrowed for an agreed time. At the end of the interest only term you repay the whole loan or could request to switch to a loan where your repayments are then made up of both interest and principal (the money you borrowed).

revolving credit

A revolving credit loan works like a large overdraft on a transaction account but at mortgage interest rates. It is ideal if you are good at managing money, if you have surplus income or if your income varies over the year.

Your pay can go straight into the account. You can choose to meet the minimum interest payments or make increased repayments to pay your loan off faster and make significant savings on interest. Because it has a floating interest you do not have to worry about early repayment charges. You can redraw funds up to your agreed limit for any purpose whenever you like.

Putting surplus funds into a revolving credit loan rather than a separate savings account can provide you with bigger interest savings.

maximum mortgage terms

The maximum mortgage term is generally 30 years but shorter terms are usually offered if your deposit is less than 20%.

frequency of repayments

Some banks allow weekly repayments but most fortnightly and monthly. It is best to align your repayments with how often you are paid.