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The descriptions below may vary slightly from one lender to another
and may have different features, costs and conditions applicable
then described and are subject to change at any time
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The availability
of hundreds of different home loan products makes it confusing,
complex and time consuming exercise to shop around when trying
to select the best home loan option for your needs.
This is
due to each lenders having different qualifying criteria's,
benefits, costs and features associated with their loan
products.
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As a guide the following brief descriptions
may be helpful to better understand the differences between the
most common types of loans available from Banks and non-bank lending
institutions. |
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Basic
Variable Rate loans -
this type of loan offers one of the lowest
interest rate, but also comes with minimal features and flexibility. Depending
on your situation and lender you may have to pay for extra features, benefits
and flexibility if you need them.
Standard Variable Rate Loans
- this is one of the most popular loans as it usually offers greater
flexibility and has many added features. It may have a higher interest
rate than the Basic Variable loan as it may allow the options to
fix or split your loan and may also allow additional repayments and redraws
of funds when you require it.
Home Equity Loans
- this type of
loan allows you to access the equity in your existing property that can
be used for other purposes such as holidays, renovating your home, investing
in shares / managed funds or financing of investment property.
Fixed Rate loans
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allows you to lock in the interest rate at an agreed rate for the term
of the loan. This protects you against any interest rate increases during
your loan term thus giving you peace of mind knowing that your repayments
will not increase. However if rates go down during the fixed term you
will gain no benefit and may have to keep making higher repayments.
Line of Credit
Loans - this type of credit
allows the borrower to draw down any amount of the borrowed amount at
any time up to the prearranged credit limit. This loan has no set term
and is especially suitable for investment purposes. The loan usually attracts
a higher interest rate due to the extra features and flexibility it offers.
A disadvantage of operating such a credit facility is that undisciplined
borrowers may reduce the equity they have built up in their home.
Combination / Split Rate loans
- offers the flexibility to combine or split your loan into a variable
rate and a fixed rate. This has the benefit to protect you in part if
the interest rate increases or decreases depending on the amount being
fixed or left variable.
Non Conforming Loans -
may be suitable for self employed of
borrowers who do not meet standard lending criteria in general. These
may include applicants who have bad credit history or are unable
to provide the required full documentation in support of their loan application
or wanting to borrow more than 100% of the property value.
All-In-One Loans
- are usually an everyday transaction
account that's linked to your existing home loan. The benefit offered
is that it reduces the amount of interest payable, by keeping your money
in your loan account longer and only taking money out for your living
expenses as required. This reduces the repayment amount owed on the outstanding
loan balance therefore making your money work harder for you.
For further information please
give us a call on 1300 137 367
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