How to pick the best type of home loan

How to pick the best type of home loan

Andrew Heaven answers a readers question in The Australian about how best to approach selecting the right type of home loan.

In deciding whether to have a P&I or IO loan, consider the purpose of the loan: is it for investment or home purchase? Short term or long term? Can you afford higher payments?

Andrew provides a great overview of the questions that you or your credit advisor should be asking. When selecting the best type of home loan you need to understand the purpose of the loan, owner occupier or investment, and your goals, pay of debt quickly or minimise interest payments.

The most appropriate loan structure and repayment method will depend on your income, your cashflow needs and how disciplined you can be in debt reduction.

By understanding your purpose for the loan and your goals and requirements and taking into account cashflow, income and your discipline around debt reduction you can then work out what is the most appropriate loan structure and features for you. It is important to remember what is suitable for one person is not necessarily suitable for you.