What is the current Interest Rate in Sydney?
The current interest rate at the Reserve bank of Australia is 0.25%, however, the commercial rate that is payable is on a mortgage (assuming it is a principal place of residence) is closer to 3%.
What are Mortgage Repayments Sydney?
Mortgage repayments are the monthly or fortnightly repayments of principal and interest. The total amount of the loan reduces over time as you make these payments, however, their proportionate contribution to the balance remains fixed according to how much they cover each month i.e if your mortgage is for 30 years then an extra $20 per day will be less significant at the end of the time frame.
What is Lenders Mortgage Insurance (LMI)?
Lenders Mortgage Insurance or LMI is an insurance policy that covers the lender in case of default from a borrower. An additional premium is added to a home loan which typically amounts to an extra overall cost for the borrower. This can generally be avoided if you have a deposit that is greater than 20% of the property purchase price or if you have someone to go as a guarantor on a loan.
What is a Variable Interest Rate in Sydney?
A variable rate is a home loan interest rate that has an index tied to it and adjusts whenever the index changes. If you have a variable rate type of home loan, it is highly recommended to check the market as often as possible.
Sydney Principal and Interest on Home Loans
A standard mortgage has an interest component and a repayment component. The interest component is only paid when you have not yet paid off any part of your loan and goes towards paying off the capital amount. The repayment component is the amount of money that you pay every month that goes towards paying back both the interest and capital.
Difference between Standard Variable Rates & Fixed Rates?
The main difference between fixed and variable rates is the security that a fixed rate offers, with home buyers able to budget certainty of repayments. You can work out how much you will owe, without any changes to interest rates. Fixed Rates are best suited for people who plan on keeping their home loan for a fixed period of time.
A standard variable rate is a home loan interest rate that has an index tied to it but does not adjust whenever the index changes. A fixed-rate is a home loan with an interest rate that is fixed for the term of the loan.
What is the difference between Principal & Interest and Interest Only?
An interest-only loan is generally taken by investors looking to purchase property but does not have the funds available to make the initial 20% deposit. Interest-only loans allow you to pay off your regular daily expenses such as groceries and utilities and
What are Discount or Offset accounts?
A discount account is an additional savings account that has a higher interest rate attached to it. The benefit of the offset account is that your mortgage repayments go into this savings account first instead of your everyday savings account. This enables you to reduce the overall interest paid on the home loan.
What are Different Types of Loans?
There are two different types of loans that you will find in Australia, these are either variable rates or fixed-rate loans. A variable-rate loan changes whenever the index changes. A fixed-rate loan stays the same for the term of the contract that you sign up for.
Can I fix my interest rates in Sydney?
The short answer is yes, you can fix your interest rate for a certain term of time however it will require you to pay a larger lump sum upfront than if you were on a variable loan. It is best to speak with one of our experts at Kaleido Loans who will be able to assist.