Basically, there are four types of home loans - the basic home loan, the standard variable rate loan, the equity line of credit loan and the fixed rate loan. Basic home loan. This is the most ideal type of loan if you are a first time home buyer. This no frills home loan has a variable interest rate which means that if the interest rates fall, you will enjoy a lower amount of minimum repayment. Standard variable rate loan. This type of loan has variable interest rates too. Monthly repayments are lowered if interest rates are low. In the same manner, repayment will increase if interest rates rise. Fixed rate loan. Equity line of credit loan. This type of loan requires no fixed repayments.
We list below a brief explanation of each of the more common types of home loans available to home owners and home buyers. Mortgages do come with interest rates, like any other loan. Subprime Lending, Subprime lending refers to a lender providing credit to borrowers who don't yet meet prime underwriting guidelines. Subprime lending was a common type of lending during the 2007 credit crunch. Home Equity Loan, A home equity loan is simply a loan wherein a borrower puts the equity of their house up as collateral. Equity loans are given in one lump payment generally with a fixed, as opposed to adjustable, interest rate. Home Equity Line of Credit, A Home Equity Line of Credit, or HELOC, is a different form of Home Equity Loan. Whereas a Home Equity Loan uses the home as collateral for a lump sum, the HELOC uses the home as collateral for a line of credit.