5 Types of Perth Home Loans and Which One to Choose
Perth, UK is a great place to look for a loan from lenders, and to make great plans for your future. With tons of property waiting to be turned into amazing projects, you can say that getting a loan and starting to work is the best thing you can do for yourself in 2021.
When it comes to home loans, you need to know that there are several options available for you. If you hire the best mortgage broker in Perth, they’ll tell you that you should be looking for an option that will best suitable for you and your project’s needs.
There are many different ones, and in this article, we’re only going to focus on the five most interesting home loans. If you want to know more about the options ahead of you, do read on and learn more about this topic!
1. Construction loan
The construction loan, as the name suggests, is made for constructing your own house. The lenders will also allow you to apply for one if you already have a home, but you want to make thorough renovations and make it look better.
In both cases, you’re getting the funds in several steps. You don’t get all the money upfront, but you apply for every single stage as the last one was finished. Don’t worry, this is not a long and exhausting procedure. If the funds were pre-approved, then you have nothing to worry about.
The broker might tell you more about this, but in general, this is a standard procedure that makes all parties safe from scams. The client who wants the job done, the bank that won’t let someone withdraw a tremendous amount at once and then disappear, and the contractors who are going to be covered at all stages.
In most cases, the lenders release the money in six stages. The first one, which is a deposit, then for building the base, then the frame, lockup, fixing, and completion. Not all stages necessarily have to be the same amount. See more about this type here.
2. Bridging loan
The bridging loan is made for those who find themselves in a gap between buying and selling a home. There are lots of those situations in which people move from one place to another. The reasons can be different, and people can go from bigger to smaller places and vice-versa.
In both cases, the lenders will prepare a special case for them, which they call bridging. It is made for people who need to bridge the situation or go from one place to another.
Sometimes, we find ourselves wanting to sell our old home, but if we do it, we’d have nowhere to live. This option is made for those borrowers. With this one, you get to buy a new home, and only then start selling the old one. You basically have two properties, but you’re obligated to sell the other one.
It is made specifically for those in that kind of situation. The interest rates are made for a short time, typically six months or so. This is the time that is calculated that will be enough for selling a property.
3. Owner-occupier loan
This one is made for those who’re going to live in the place they are asking for money to buy. It is the most common traditional option that most people ask for. This loan is made with the lowest interest rates, and this is why it is the most popular.
Banks and the other lending companies feel free to allow lower rates because they are comfortable knowing that the person asking for the credit is going to live in the place. The mortgage is then easy to be withdrawn if the borrower isn’t paying the monthly rates that were agreed with the contract. See more low-rate options here: https://www.bankrate.com/loans/prequalification/personal-loans/rates/?.
4. Discount mortgage
This one’s excellent for those who already have a loan and they are paying a variable interest to the lender. With the discount, they can get a fixed amount on the interest. For example, if the borrower has a 3.5% interest that is variable, they can get the discount and now pay 2.9%.
Of course, this isn’t that simple, and all people would love to opt for this option whenever it appeared. However, there are lots of features going in the way of the lender that is written with the small print. Like the fact that whatever the circumstances on the market are, the interest can never go lower than the fixed amount everyone agreed on.
In other words, yes, it may be good for some, but might become worse for others. This is why it’s great to have a mortgage broker that will explain the pros and cons of the situation.
5. Investment loan
People who are in the business of real-estate, often tend to get loans that are going to help them buy or renovate a particular property they are interested in. After they do this, they are going to sell the property and get the money back to the lender.
The lenders don’t like this because they make almost no profit. Let’s say the entire deal lasted 6 months, and during this time, they didn’t have the money to operate and still made scrubs out of the deal. The borrower sells the property, makes more money, and give the lender their money back.
Because of this, the lenders made interest rates for these types of loans higher. However, the options in terms of returning the investment are much more liberal than other options, so it’s good for both parties.
You now know some of the most commonly used and popular loans out there. There are many more, and they all have their pros and cons. A person who’s not into finance or banking, won’t be able to understand every bit of them. That’s why it’s smarter to get a mortgage broker who will make things much clearer and will get you the best deal.