Finding the right loan is as important as finding the right investment!!
There are literally hundreds of loan available, with new products added all the time.
Introductory loan are also known as honey moon Loans due to the ‘honeymoon period’ during which you pay a discounted interest rate, these loans usually offer a very cheap rate for an initial period of time and specially meant for first home buyers. However the low rate only lasts for initial 12 months .The introductory loan can be of two forms:
- Fixed Discount:The fixed discount is a rate that will be variable, but fixed at a certain level or margin below the standard variable rate.
- The discounted fixed rate: The discounted fixed rate is a rate fixed for the introductory period of the loan, and won’t move with the market.
One of the common forms of loan is the low document or ‘low-doc’ loan. These have been available in Australia since long time. These types of loans are generally meant for self employed people who have income and assets but are unable to provide the required financial statements or tax returns. With low-doc home loans the fees and interest rate are generally high. Before applying for a Low Doc home loan; it's worth sitting down with an experienced mortgage broker to work out your net income and the amount of loan you can realistically afford to service on a regular basis. Doing this could help to avoid disappointments, plus you could also uncover more lenders or product choices which you were not previously aware of.
Line of Credit
A line of Credit is same like having big cheque book, however with interest accruing on the balance. A line of credit, or equity line as they’re sometimes called, is an approved limit of borrowings that you can use a piece-at-a-time or all at once.
A line of credit loan facility can be a great way to access the equity in your home and can be used for things like home renovations, investments or other personal purchases. “It acts as a loan, but, unlike a loan, a line of credit doesn’t require you to pay interest on the credit you don’t use.” However, they can be very costly if the balance of the line of credit is not regularly reduced. It requires an interest-only payment as a minimum each month, which can add up to a lot of interest over the long term.
Fixed loans are meant for that borrower who exactly wants to know what their repayment would be .In these types of loans the interest rate are set for a particular term- usually one to five year. The main advantage of this type of loans is that if rate rise, you wouldn’t have to pay anymore and they also provide more precise budgeting. It also provides the peace of mind for borrowers concerned about rate rises.
These are the most popular types of loans in Australia and offered by most lenders. In these types of loans there are fluctuations in interest rates, as set by the Reserve Bank. Variable Loans are similar to basic home loan, but with a few more features and flexibility so the rate is slightly higher. Most come with added features such as redraw, the option to split between fixed and variable, and allowing you to make extra repayments without penalty.
If you are looking for flexibility and security then split loan would be the best choice or even if you are confused between fixed and variable loans then your choice can be made easier by choosing the split loans. A split loan allows you to allocate a portion of your loan amount to attract a variable interest rate, and another portion to attract a fixed rate. You would able to take the advantage of the security of fixed rate but with the flexibility of variable rates,as well as reduce the impact on your loan repayments if interest rates rise.
Interest only loans allow you to cover the interest on the amount you have borrowed, during the interest only period. You repay only the interest on the principal during the term of the loan; therefore, repayments are lower than with a standard principal and interest loan. At the end of the interest only period – usually one to five years – you must start making Principal and Interest Repayments over the remaining term of the loan. The main advantage of Interest only loan is it reduces the cost of buying a residential investment property in the short-term, which could allow you to make greater contributions to your principal place of residence.
Non- Conforming Loans
A non-conforming loans are simply referred to a term used for home loans that don’t typically conform to the major bank’s standard loan criteria. It is basically meant for the people with poor credit ratings often have trouble sourcing a home loan. When you’re labeled as ‘non-conforming’, it’s understandable you may feel help might be hard to find. But don’t worry. Fin Finder’s more flexible and holistic approach has helped provide non-conforming home loans to borrowers.
It can be very over whelming, please give us a call at 0431 381 596 so that we can give help you find the right one for you!!