There are so many different loans out there in the market and it can be really hard to determine which, is the best home loan, for you amongst all the marketing noise.

Here is your RealRenta checklist to help you decide:

• Fixed Rate Loans

These loans give you certainty because you know up-front what your annual repayment is going to be.

So once you know what you are going to receive in rent, you can estimate if you are going to have a surplus or deficit and manage cashflow accordingly.

There are some cons, many lenders will charge you a break fee if you repay more than the fixed rate allows for and if you want to refinance during the term of the loan.

• Variable Interest Rate Loans

This type of loans means your payments will fluctuate. You could potentially benefit from interest rate reductions and if the loan has a redraw facility, you will be able to redraw funds from any extra payments you have made.

You can also choose a split loan with a mix of fixed and variable interest rates.

• Interest Only Loan

As the name suggests, you won’t pay anything off the principal with this loan.

So if the value of your property increases, you will have equity but if the market flattens, you may not have any equity, apart from your original deposit.

The good thing for investors is that interest only payments are tax deductible.

• Offset Accounts

Offset accounts allow you to use your mortgage as an offset account with greater flexibility and interest calculated daily..

For instance, you could have your salary paid into your offset account which is linked to your home loan.

The balance of your mortgage will be reduced by your offset balance and you will pay less interest, over the long term and you will still be able to withdraw your cash when you need it.

It is worth noting that most offset accounts are linked to variable rate loans rather than fixed.

• Lines of Credit

This loan allows you to use the equity in your existing property to secure your investment loan.

Rather than receiving a lump sum, you can access as much of the loan as you need.

This kind of loan does require some financial discipline.

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