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Loan Products
There are many loan products in the market today and the one that best suits your requirements can be difficult to find. Here are some of the products available:
There are many loan products in the market today and the one that best suits your requirements can be difficult to find. Here are some of the products available:
Introduction Rates
Otherwise known as honeymoon rates most lenders offer a fixed or variable rate for the first 12 months of the loan. At the end of this term the loan converts to a standard variable rate. Some lenders will allow you to convert to another Product but may charge a switch fee.
Otherwise known as honeymoon rates most lenders offer a fixed or variable rate for the first 12 months of the loan. At the end of this term the loan converts to a standard variable rate. Some lenders will allow you to convert to another Product but may charge a switch fee.
Standard Variable Rate
The Standard Loan product.
A Standard Home Loan rate will usually increase/ decrease in line with the Reserve Bank Rates. In most cases, you can make extra repayments and/ or pay out your loans without penalty.
The Standard Loan product.
A Standard Home Loan rate will usually increase/ decrease in line with the Reserve Bank Rates. In most cases, you can make extra repayments and/ or pay out your loans without penalty.
Basic Variable rate
A Basic Variable Interest Rate is set at a predetermined margin below the standard variable interest rate usually at about 0-70%. This product is also known as a 'No Frills' variable rate and like the Standard Variable Rate, you can usually make extra repayments and/or pay your loan out earlier without penalty.
The Basic Variable rate loan does not have the ability to link to a 100% Off-set account.
A Basic Variable Interest Rate is set at a predetermined margin below the standard variable interest rate usually at about 0-70%. This product is also known as a 'No Frills' variable rate and like the Standard Variable Rate, you can usually make extra repayments and/or pay your loan out earlier without penalty.
The Basic Variable rate loan does not have the ability to link to a 100% Off-set account.
Fixed Rate
This product allows you to fix your interest rate for 1-5 years to allow you the piece of mind that your repayments are fixed for the chosen term. The interest rate charged cannot be increased or decreased during your fixed term. At the expiration of this term, the loan will change to a standard variable rate unless you choose to refix. This may incur a fee depending on the lender. Usually a limitation will apply as to the amount of extra repayments you can make during the fixed term. You may also incur a repayment penalty should you pay your loan out before the expiration of your Fixed Rate term.
This product allows you to fix your interest rate for 1-5 years to allow you the piece of mind that your repayments are fixed for the chosen term. The interest rate charged cannot be increased or decreased during your fixed term. At the expiration of this term, the loan will change to a standard variable rate unless you choose to refix. This may incur a fee depending on the lender. Usually a limitation will apply as to the amount of extra repayments you can make during the fixed term. You may also incur a repayment penalty should you pay your loan out before the expiration of your Fixed Rate term.
Interest Only
Ideal for properties purchased for investment purposes. You can set your repayments at the interest charged on your loan without any principle reductions. Example: Interest charged on the loan is $2,000 your repayment for that month is $2,000. Interest only terms are usually for a maximum of 5 years. At the expiration of the term the loan may convert to a principle and interest repayments, or be renegotiated completely. This will depend on the Lender. Products can be used for this purpose can include Introductory, Standard and Basic Variable Rates, and Fixed Rates from 1-5 years (most common).
Ideal for properties purchased for investment purposes. You can set your repayments at the interest charged on your loan without any principle reductions. Example: Interest charged on the loan is $2,000 your repayment for that month is $2,000. Interest only terms are usually for a maximum of 5 years. At the expiration of the term the loan may convert to a principle and interest repayments, or be renegotiated completely. This will depend on the Lender. Products can be used for this purpose can include Introductory, Standard and Basic Variable Rates, and Fixed Rates from 1-5 years (most common).
100% Off Set
These products are designed to pay off your loan sooner. Your savings account is linked to your mortgage. The daily balance of your savings account is deducted from the balance of your loan and you are charged interest on the remainder. This means that if you own $100,000 on your mortgage and you have $10,000 in your savings account you will be charged interest on $90,000 effectively saving thousands off your mortgage. Your home loan repayment remains at the contracted loan amount as there is no allowance made due to funds held in your saving account.
Interest rates applicable to this product are usually the Standard Variable Rates. However some Lenders will allow 100% Off Set Accounts to be linked to Introductory and 1 year fixed rates.
These products are designed to pay off your loan sooner. Your savings account is linked to your mortgage. The daily balance of your savings account is deducted from the balance of your loan and you are charged interest on the remainder. This means that if you own $100,000 on your mortgage and you have $10,000 in your savings account you will be charged interest on $90,000 effectively saving thousands off your mortgage. Your home loan repayment remains at the contracted loan amount as there is no allowance made due to funds held in your saving account.
Interest rates applicable to this product are usually the Standard Variable Rates. However some Lenders will allow 100% Off Set Accounts to be linked to Introductory and 1 year fixed rates.
Line of Credit
Similar to the 100% off-set products except your mortgage is also your savings account. Most lenders will set your credit limit at 80% of the value of your property however some lenders will lend 90% of the value. Essentially you do all your spending on an interest free credit card. The credit card is repaid in full on the payment date to avoid interest charges. Because you are charged interest on daily loan balances, the more money you have deposited into your mortgage, the less interest you pay.
Interest rates applicable to this product can be slightly higher than the standard variable rate.
Similar to the 100% off-set products except your mortgage is also your savings account. Most lenders will set your credit limit at 80% of the value of your property however some lenders will lend 90% of the value. Essentially you do all your spending on an interest free credit card. The credit card is repaid in full on the payment date to avoid interest charges. Because you are charged interest on daily loan balances, the more money you have deposited into your mortgage, the less interest you pay.
Interest rates applicable to this product can be slightly higher than the standard variable rate.
Construction Loans
Construction loans are provided by some Lenders. Usually while constructing, the Standard Variable Rate is all that is available. However on the completion of the construction, you may have the option of switching to any product. Repayments while constructing are on an Interest Only basis to assist your budget. Your full repayment commences once Final Drawdown has been completed. Please note that some Lenders will allow construction on selected Products other than the Standard Variable Rate.
Construction loans are provided by some Lenders. Usually while constructing, the Standard Variable Rate is all that is available. However on the completion of the construction, you may have the option of switching to any product. Repayments while constructing are on an Interest Only basis to assist your budget. Your full repayment commences once Final Drawdown has been completed. Please note that some Lenders will allow construction on selected Products other than the Standard Variable Rate.
Lo / No Doc
These products are available to clients who have insufficient financials (self-employed) or do not wish to provide documentation on income earned (PAYG). Minimum deposited required start at 20% and interest rates vary among Lenders.
These products are available to clients who have insufficient financials (self-employed) or do not wish to provide documentation on income earned (PAYG). Minimum deposited required start at 20% and interest rates vary among Lenders.
Credit Impairment
These products are available to assist people who have had defaults or an unsatisfactory credit history and are unable to obtain finance from the standard Lenders. Interest rates and fees vary and may depend on the credit history.
These products are available to assist people who have had defaults or an unsatisfactory credit history and are unable to obtain finance from the standard Lenders. Interest rates and fees vary and may depend on the credit history.
