With the latest round of mortgage refinancing announced, investors may be looking for a more immediate payoff than a few months down the road.
But how much does it actually mean to you?
What is a ‘mini loan’ and how much do you need to get the financing you need?
The term ‘mini mortgage’ refers to a loan up to $1,500, which is the amount you would need to borrow in the short-term if you were buying a home with the intention of buying it back when you’re ready to sell it.
In the long-term, you’d need to repay this amount in full after 20 years.
This is usually the case if you are buying a house for less than $100,000, but this can vary depending on your income, where you live, and other factors.
While the interest rate on the mortgage you choose is based on your annual income, the interest you pay on it can also be calculated.
There are a number of different types of mortgages available, depending on what kind of interest rate you have.
For example, a 5-year fixed rate mortgage, which typically rates between 0.25 per cent and 0.50 per cent, has a monthly payment of $200, and a 30-year term mortgage, typically rates at 2.75 per cent a month, has monthly payments of $1.4 million.
The amount you need for the loan varies depending on the type of loan, and the interest rates you pay.
The interest rate can be set by your lender, so if you’re getting a loan from a local lender, it might not matter whether you get a ‘fixed’ rate mortgage or a ‘variable’ rate one.
If you want a fixed rate one, you’ll need to pay interest on the loan at the rate of 3.25 to 5 per cent per annum.
If a variable rate loan is offered, you will also pay the rate on a monthly basis, and your monthly payments are capped at $1 million.
This means if you repay a variable loan within 10 years of its commencement, you would pay back $400,000.
If interest rates on a variable mortgage are set by the bank, you might also need to look at whether the interest is fixed or variable.
If you’re going to be a homeowner, you may also want to consider whether your credit score will be affected.
This could include whether you can access certain loans that are offered by credit unions.
A mortgage that requires you to repay your principal and interest on a home purchase loan can also affect your credit rating, as well as any other type of debt you might be borrowing.
To determine your creditworthiness, you can take a credit report, which provides information about your credit history and the loan you’re applying for.
This can also help you decide whether you should borrow from a bank or lender, and how long you need.
A credit score can also give you a better idea of how much you should be willing to borrow and how you will repay it.
If your credit scores are good, you could also be eligible for some other financial support, such as a mortgage or credit card.
If your credit is low, you should also consider whether you’ll be able to afford to repay it all in one go, or if you’ll have to pay it off over a period of time.
This will depend on how much money you can borrow and whether or not you have any other debt.
In some cases, you won’t be able repay your mortgage, as your income will decrease.
If this is the case, you’re better off taking out a personal loan to repay some of your debt.
The average interest rate of mortgage loans varies from $0.15 per cent to $0,20 per cent.
A 3.75-per-cent loan may cost you $25,000 to $30,000 depending on whether you are getting a fixed or a variable.
Some types of loans are also available with higher rates, such a 5.95-per cent fixed rate loan, which may be up to 10 per cent higher than the average interest rates.
You’ll also need a higher percentage of your income to repay the loan.
A 6.5-per/cent loan might cost you up to 30 per cent of your total income.
The biggest issue investors face is how much they will be able afford to pay back over the life of the loan, as the interest payments on a loan can vary significantly depending on where you are, and whether you’re buying a property for less or more than $200.
For many people, this will come down to their annual income.
While it’s not an issue for everyone, it is important to understand the interest repayment plan for yourself before you sign the paperwork to borrow money.
To find out more about how to borrow from the bank or mortgage lender, read our guide to mortgage finance for Australians.