Ah Okay. So What Kinds of Home Loans Are There?

Term Loan

This type of loan uses a fixed interest rate that’s applied over the tenure of the loan. This means you pay the same amount every month plus interest. The good thing about these loans is that you pretty much know what to expect.

Fully Flexible Loan

This type of loan allows you the freedom to make additional payments as and when you’re able. Also, the interest rates are calculated against the reducing balance of your loan. In other words, the larger your payments, the lesser total interest is incurred over the tenure of your loan. You can also withdraw you over-payments without hassle as the loan is usually linked to a current account.

Semi-flexible Loans

This type of loan is a bit of a mix between the two. You’re still allowed to make additional payments, and those payments go toward reducing the interest rate for that loan. However, withdrawing over-payments requires a formal request from the bank, and you’re likely to incur some charges for doing so.