Common Types of Home Loans

There is no question that there are so many types of loan products available out there in the market today. This is of course due to the fact that people have different needs, and of course different financial capabilities.  Some individuals can pay more in a small amount of time, others can take thirty years to pay a large lump sum, while others do not even need a loan, and can pay in cash if they want to.

Due to these simple facts, banks and lenders formulated different loan products.  The most common of these products of course are fixed rate loans and variable rate loans.  Fixed rate loans as the term suggests, have a fixed rate pegged through the years.  The interest rate neither goes up nor down, but stays at a certain level agreed upon in the loan contract.  The usual basis of the rate is often set at the prevailing interest rates.  This means that a good time to decide on a fixed rate would be when interest rates are set low.

On the other hand a variable rate means that the interest will follow the trends of interest in the home loan industry.  Where the rates are high, then the interest rate on the variable interest loan would also be high.  Where interest rates are low, then the variable type loan also goes down.

These two types of loans are the most common loan types on offer.  Knowing the basics of these two loans can prepare you to understand and appreciate the other various home loan types, as usually they are in the form of either a variable rate or a fixed rate, or a mixture of both.

To know more about the other types and forms of home loan products available, it would be advisable to consult the experts on home loans and visit home loan forums.  They can provide you with information on fixed or variable rate loans, or other types of home loans that may catch your fancy.