Dying to purchase your dream house, but have limited funds to pursue that dream? Don’t worry; a home loan or a mortgage is all you need. A home loan or a mortgage is the easiest way for families or individuals to buy their desired property. While the terms “home loan” and “mortgage” are used interchangeably, they are two different things. A home loan refers to the money lent by a bank or financial institution to pay for a property. A mortgage is a security instrument in which property is used as collateral. If the borrower defaults on paying his mortgage payments, the bank forecloses the property and sells it off.

Types of home loans in Australia

There are many types of home loans available in Australia, and it pays to understand them before making that decision.

Variable-rate loan – The most popular among homebuyers. This relies on the Reserve Bank of Australia’s changing interest rates, which means borrowers may pay lower or higher in certain months. Borrowers are also allowed to pay their loan faster through extra repayments, redraw facility and offset account.

Fixed-rate loan – This locks in the loan for a period of one to five years at a fixed interest rate, which is typically above the current variable rate. Borrowers don’t have to worry about changing rates on certain months, but they can’t enjoy the other benefits of a home loan either such as extra repayments.

Guarantor loan – Individuals seeking to borrow over 80% of the property’s purchase price but are not keen on paying for lenders mortgage insurance may request a family member or friend to be their guarantor and use a portion of their family member or friend’s property as a security blanket for their own mortgage.

Low-doc loan – Ideal for the self-employed, business owners and freelancers who are not in possession of the usual documents required to get a loan. This loan is tied with a higher interest rate and fees compared to other loans.

Line of credit loan – Also called a home equity loan, this enables borrowers to use the equity of their property as collateral, with the loan amount depending on the value of the property. Borrowers need to make extra repayments or risk extending their loan term.

Non-conforming loan – A perfect fit for those who have a poor credit history, wish to borrow over 80% of the property’s value or are unemployed for a while, but this carries a higher interest rate than the other loan types.

Where to go for mortgage or home loan brokering services

Home loans greatly vary from lender to lender. Terms, negotiations, paperwork, and identifying the right loan that matches your financial capacity can prove to be a challenge. Whether it is a new home or a refinance, MBR Association exists to guide you every step of the way. MBR Association’s dedicated brokers will save you from the hassle of scrolling through hundreds of lenders, comparing their terms, interest rates, fees and the like. MBR Association has access to a network of lenders and determines the best loan offering targeted for your exact needs at the best possible rate.The firm not only operates in Merrylands but also expands its services in the nearby suburbs of Parramatta and Hills Area to cover multiple clients with varied requirements. Planning to obtain a mortgage or a home loan? MBR Association is the right broker for you. Hurry, call MBR Association today on 0434 27 20 18 or email info@mbrassociation.com au and make your way to your dream home.