Can you please define this βcliffβ? Was that in the mortgage contracts the buyers signed? Or is this some obscure option the banks have in Australia, and the buyers didnβt know?
Hey Benedict. The cliff isn't a hidden strategy by banks to screw customers. It's a conscious decision that borrowers make. You can either opt for a fixed rate mortgage in its entirety or a hybrid one which is fixed for a number of years but then converts to a variable one after a certain time passes. The advantage is you can take advantage of a locked rate however you need to pray that interest rates will stay low when your mortgage eventually comes off the fixed rate as you are now exposed to a variable interest rate. It essentially requires borrowers to refinance so banks ensure customers are carrying their fair share of risk and not just enjoying low rates they booked years earlier in a high interest rate space
Can you please define this βcliffβ? Was that in the mortgage contracts the buyers signed? Or is this some obscure option the banks have in Australia, and the buyers didnβt know?
Hey Benedict. The cliff isn't a hidden strategy by banks to screw customers. It's a conscious decision that borrowers make. You can either opt for a fixed rate mortgage in its entirety or a hybrid one which is fixed for a number of years but then converts to a variable one after a certain time passes. The advantage is you can take advantage of a locked rate however you need to pray that interest rates will stay low when your mortgage eventually comes off the fixed rate as you are now exposed to a variable interest rate. It essentially requires borrowers to refinance so banks ensure customers are carrying their fair share of risk and not just enjoying low rates they booked years earlier in a high interest rate space
Does Australia assist her military veterans with special mortgage rates or guarantees?