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<span class="orangetext">HOME LOANS AND PROPERTY INVESTMENT LOANS</span>
<p>Home and Investment Property Loans are for those :
<ul>
<li>Purchasing</li>
<li>Refinancing</li>
<li>First home buyers</li>
<li>Investors</li>
<li>Land Purchasers</li>
<li>Building a new house</li>
<li>Renovating and extending</li>
<li>Consolidating Debt</li>
</ul>
<p>There are a range of home loan products available. Different lenders have different names for their products however
most can be differentiated in the following ways:
<ul>
<li>Standard variable</li>
<li>Basic variable</li>
<li>Introductory rate loans</li>
<li>Fixed rate loans</li>
<li>100% Offset loans</li>
<li>Equity loans</li>
<li>Line of credit</li>
<li>Home to home loans (bridging)</li>
<li>Construction loans</li>
<li>No deposit home loans</li>
<li>Lo doc / no doc loans</li>
<li>Non-conforming loans</li>
<li>Credit impaired loans</li>
</ul>
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<p><h2>Standard Variable</h2>
<p>Standard variable loans are the most popular loan product. Standard variable loans are for customers who require a variable
interest rate with maximum flexibility. They offer both flexibility and desirable features such as the ability to split the
loan, make extra repayments, and a loan re-draw facility. The interest rate may vary and can increase or decrease. The loan term
is usually 30 years.
<p>The main disadvantage is that if interest rates rise you will have to make higher repayments.
<br>
<p><h2>Basic Variable</h2>
<p>Basic variable loans, generally offer a lower interest rate than the Standard Variable loan but also include fewer features
and less flexibility. A Basic Variable Loan is best suited to a budget conscious borrower looking for a Ôno frillsÕ loan.
<p>Many lenders now offer basic variable loans with lower interest rates than standard variable loans but with fewer features.
Like all variable loans, the interest rate and your repayments can vary over the term of the loan.
<p>The main disadvantage of basic variable loans is that they do not offer the same range of features or flexibility as other
variable interest rate loans. For example, many basic variable loans cannot be used in combination with other loans and are not
portable.
<br>
<p><h2>Introductory rate loans</h2>
<p>Introductory rate loans also known as discount variable rate home loans, and honeymoon loans are for customers who want the same
features of a standard variable home loan with an introductory or honey moon rate which is usually lower for the first 6 or 12
months. After this period the loan reverts to a standard variable rate and the repayments increase.
<p>The interest rate is usually low to attract new borrowers and normally lasts for a period of six months to one year. Rates can
be fixed, variable or capped. After the introductory period, most introductory loans revert to the standard variable rate. Also
called a discounted or honeymoon rate. Some lenders allow you to switch to another product eg. 100% Offset or fixed rate after
the introductory period.
<br>
<p><h2>Fixed rate loans</h2>
<p>Fixed rate home loans are for customers who are concerned that interest rates may increase and want choose a rate that is fixed
and will not change over a specified term. This means that the monthly repayments will remain the same for the duration of the
fixed period.
<p>Fixed rate loans allow customers to fix the loan rate for a predetermined period of time usually 1 Ð 5 years. At the end of
that time the loan reverts to a variable rate or can be renegotiated to another fixed term. Fixed loans may have more limited
features that variable loans, eg. some lenders allow you to make extra repayments for no fee. However, fixed rate loans do not
generally have a redraw facility.
<p>Customers can choose to lock in the fixed rate at the between the time of application to settlement. This normally incurs a
fee. With a rate lock, the rate is generally capped at the approval rate for a short period of time eg. 2 months. If interest
rates declares during that time the customer is eligible for the lower rate, and if they increase the customer is eligible for
the 'locked in' rate.
<p>The main disadvantage of fixed rate loans is that if interest rates fall during the fixed period you will be paying a higher
rate by comparison and they lack the flexibility of other products.
<br>
<p><h2>100% Offset loans</h2>
<p>100% Offset loans, also known as mortgage offset loans combine the benefits of a separate savings account with a home loan,
where excess funds in the transaction account are used to offset against the loan principle thereby reducing the amount of interest
calculated on their home loan. Any money you put in the offset account is deducted from your loan balance before interest is
calculated. The benefit of this is that customers retain full access to their funds in the transaction account. The interest rate
on the offset account is the same as on the loan.
<p>Some conditions may apply to offset accounts. Whilst most lenders offer mortgage offset account facilities the amount and
percentage of offset can vary between lenders, so check the product features carefully.
<br>
<h2>Equity loans</h2>
Home Equity Loans offer a revolving line of credit which provides access to the equity in your home, usually up to 80% in total of
the value of your home/ property. A Home Equity Loan lets you borrow against your equity for any worthwhile purpose at an interest
rate which is lower than a personal loan.
<p>Equity Loans are for customers who want access to the equity in their home to use funds for other purposes e.g. wealth creation
and lifestyle, managed funds, holiday, home renovation, purchase a car or financing an investment.
<p>The main disadvantage of this type of loan is as with a line of credit, it is possible to reduce the equity built up on your home.
<br>
<h2>Line of Credit</h2>
A line of credit is an interest only variable rate loan secured against a residential property allowing access to funds whenever
you need them. They have the added flexibility of a transaction account built into the home loan that enables you to draw down funds
as you need them.
<p>Line of credit products are flexible ways to raise funds for investment purposes by providing cash at call up to the prearranged
credit limit.
<p>The main advantages of lines of credit are that you can use the money as you need it and pay it back when you can, interest rates
tend to be lower than for credit cards or personal loans, credit limits are usually higher than for credit cards or personal loans.
<p>The disadvantage is that unless you are careful, it's possible to reduce the equity you have built up in your home.
<br>
<p><h2>Home to Home loans</h2>
<p>Home to home loans are also known as bridging loans, and are a short-term housing loan where interest only payments are either
paid by borrowers or capitalized into the loan. The principal is due for repayment at the end of the loan term. This type of loan
has been developed to meet the needs of borrowers who purchase a new property prior to selling their existing one. Standard variable
interest rates usually apply during the 'bridging period' following which the customer can convert from a standard variable loan
to an alternate product with their lender.
<br>
<p><h2>Construction Loans</h2>
<p>Construction loans are for customers who are planning on building a residential dwelling. They are generally a standard variable
product, and only require interest only repayments during construction phase. On completion of construction, customers can choose to
convert from a standard variable loan to an alternate product with their lender. This may require a switching fee, however does not
normally incur an new application fee.
<p>Construction loans are normally set up to make a maximum of 5 progress payments.
<br>
<p><h2>No Deposit Home loans</h2>
<p>No deposit home loans are for customers who have been unable to save
a deposit for a property and depending on the lender are available for
both owner occupier and investors. They are suited to people who have
little equity but a good cash flow. They can be available for houses,
house and land packages, building loans, strata units and town houses.
They normally involve a loan extension fee which can vary between 1.5
and 2.5% of the total loan amount.
<p>This type of loan is not available for refinances, nonresidents and discharged or undischarged bankrupts.
<br>
<p><h2>Lo Doc / No Doc Loans</h2>
<p>Lo Doc or No Doc Loans are specifically designed for applicants who are self employed, PAYG, seasonal workers and small business
owners who have income and assets but may not have the traditional forms of income evidence such as financial statements or tax
returns at the time of the application. This type of loan is generally flexible and includes a variety of features.
<p>Lo Doc loans are for customers who are not able to provide evidence of income in the normal way. Lo Doc loans are most often
used by self-employed persons, however can some lenders will approve Lo Doc loans for PAYG customers who may have difficulty in
verifying their income, particularly commission based occupations.
<p>The maximum borrowing for Lo Doc loans is generally up to 80% of the value of the property. Interest rates for Lo Doc loans are
competitive however do vary and can be slightly higher depending on the lender.
<br>
<p><h2>Non Conforming Loans</h2>
<p>There are many different reasons for why a person does not meet the typical lending criteria for taking out a loan. Non
Conforming Loans are designed especially for such circumstances.
<p>Some of the most common reasons include:
<ul>
<li>Newly employed</li>
<li>Working part-time, casually or as a contractor</li>
<li>Insufficient records of past savings</li>
<li>Inadequate deposit amount</li>
<li>Non-existent credit record</li>
<li>A change in life events such as recently divorced or temporarily unemployed</li>
<li>Age</li>
<li>Non traditional security</li>
</ul>
<p>Loans available to borrowers who previously have been refused finance for not meeting lenders' traditional criteria. These
include, self-employed people, contract and seasonal workers, the credit impaired, senior citizens.
<p>The main disadvantage of this type of loans is that they often have a slightly higher interest rate and/or fee structure than conforming loans.
<br>
<p><h2>Credit Impaired Loans</h2>
<p>Credit Impaired Loans are designed for customers who have had loan arrears, unpaid or paid defaults and judgments, or even a
bankruptcy history. If you believe that you may have a credit history concern, it is best to verify early that all the information
in your credit report is correct. To obtain your own credit history report visit <a href="http://www.mycreditfile.com.au"
target="_blank" class="bluelink">www.mycreditfile.com.au</a>.
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