What Makes Discount Rate Home Loans Great
As so many people apply for home loans each year, it makes sense to see tailored home loans hit the market to suit specific needs. Where one kind of mortgage might fit the needs of one potential borrower, another may be much better suited to another. One kind of home loan that is very useful for anybody who wants to pay low interest, but can also afford a potentially higher rate, are discount rate home loans, top of the list for our best home loan rates in 2018.
But what makes discount rate home loans worthwhile for a range of borrowers? Read on to find out how a discount rate home loan could make a world of difference to you.
Discount rate home loans
Nobody wants to pay a large amount of interest, whether they can afford it or not, and this is why discount rate home loans were created. Having the option to pay less can be very beneficial to many borrowers, no matter their needs at the beginning of the loan’s duration.
All lenders have their own SRV (which is short for standard variable rate), and you basically get a discount on this. Because of the savings offered, these kinds of home loans often have the lowest interest rate out of all the different kinds of mortgages on offer.
Getting a discount on your monthly interest isn’t something small, it’s something huge that can save you a lot of money. Many people choose these kinds of home loans, but they aren’t always as beneficial as they may first appear to be. This kind of home loan is good for people who want a low interest rate, but they may need to be able to afford a high interest rate if the SRV just so happens to rise. If you can’t afford a high interest rate, then it may not be a good idea to opt for this home loan deal.
How likely is it that the rates will rise?
Just because the loan starts out with a reduced rate, it doesn’t mean that the rate will stay low. The amount that you need to pay back can increase, especially as the interest will be linked to your lender’s standard variable rate. However, it may be worthwhile to consider that it can also decrease if the SRV goes down. The chances of an increased rate may not be particularly high, but these events are highly unpredictable – meaning that you could find yourself hit with high interest at any time, month on month, for the duration of your loan.
Best Home Loan rates 2018 : Uno