Variable Interest Rate Loan

Variable Interest Rates

This is a common offer by banks and has been used by many people to buy their first homes.  A Variable Interest Rate home loan has repayment periods of up to 30 years and are regularly used by home buyers today.

Advantages

Discipline - regular monthly, fortnightly or weekly repayments help you with budgeting.

Redraw - most institutions will allow you (subject to terms and conditions) to withdraw additional repayments you have made over and above the minimum repayment.

Some lenders will offer an Offset Account allowing you to place savings in the offset account against the loan.  Please contact us for further information.

You can make extra repayments at any time.

Disadvantages

The rate can go up as interest rates rise.

Professional Package

Professional Home Loan Packages

A professional package will normally, with most lenders, offer a discounted rate for the life of the loan.  Discount depends on the size of the loan.

Advantages

Interest rate discounts on the standard variable rate and some line of credit products.

Application fee NIL

Valuation fee NIL

Monthly fee NIL

Low Doc or Full doc with most lenders

Disadvantages

Annual fee applies to this package, though the discounted rate on most cases clearly out weighs the annual fee.

Split Home Loans

Split Home Loans - Fixed & Variable Interest Rate

If you have concerns of rates continuing to go up, you can choose a Split Rate Loan.  With a split loan you can nominate a portion of your loan to be fixed and the rest  variable.  You can also have more than one split loan, you can have several splits, fixed, variable, line of credit etc

Advantages

If rates go up, your fixed portion is fixed at the chosen rate saving you money.  Keeping part of your loan on variable interest rate leaves you less vulnerable if rates reduce.  You can make extra payments on the variable portion of the loan.

Disadvantages

Most lenders will penalise you for making higher repayments on the fixed portion.   You can also be penalised if you pay off your loan before the due date on the fixed portion.

Fixed Term Loan

Fixed Term Home Loan with Fixed Interest Rate

This loan has a set interest rate for a period of time. You know exactly what your repayments will be for your fixed rate term.  Considering a Split Loan can assist with fixing a portion of the loan,and keeping the remainder of the loan on a variable split. 

Advantages

Fixing the interest rate for a period of time insures against future rate rises.  

Knowing the same regular repayment each month allows you to budget easier.

Disadvantages

If interest rates come down you will pay more for your loan as your rate would no longer be competitive. 

Some lenders will penalise you for making additional repayments. 

Some lenders will have you penalised if you pay off your home loan before the due date.

Non Conforming

Non Conforming Loans

Specialised lenders can help you rebuild your bad credit rating and allow you to consolidate all your bad debts and keep a mortgage on your home.  Even if you have been bankrupt you may still have options to get you out of the red.

Bad credit ratings will not fit the criteria of a major lender in most cases, so non conforming can be a great temporary fix untill your credit history is cleared.

Advantages

Some non conforming lenders are very flexible

Bad credit, Judgements and bankrupts still have options.

Disadvantages

You'll pay higher interest rates and fees.

Larger deposits are required.

Larger amounts of equity required if refinancing

Bridging Loan

Bridging Home Loan

If your home is for sale - and you find a property to buy, or wish to build - the lender advances the money so you can purchase your new home.  Depending on the equity in your current home, you may be able to include all the fees too. The interest charged to your loan can be paid by you or added to the loan amount.  When your original property is sold, the proceeds are deposited to the new loan. The amount owing becomes your end debt and normal repayments will commence.

Advantages

Allows you to buy or build your new home before you sell your existing home.

Can help you move directly into your new home without having to rent another property.

Disadvantages

Interest will be charged on the full amount of the new loan.

If your existing home does not sell quickly, the interest bill can really add up.

You maybe forced to sell your existing home at a lower price.

Sufficient equity is required in your existing property to support the purchase of both.