Investment Loans
A type of home loan that an individual takes to purchase an investment property is called an Investment loan. Investment property can be a block of land, building or a house held by the owner to earn return on the investment either through rental income or for the capital gains.
Fixed return to the investors, providing security and producing greater returns than other forms of investment are some of the benefits of having an investment property. A thorough research, market know-how and knowledge about the market is crucial to undertake an investment property purchase. When you start to plan for your investment property, the first thing that needs to be made sure is that it doesn’t impose more financial strain on you than your borrowing capacity.
Rest Finance is here to help you reach your investment property by helping you to provide best support to find the right loans for your situation. The interest rate mechanism entailed by investment home loans are similar to the rates that are applied to Residential home loans. However, the rates usually tend to be a little higher compared to
Fixed Loan
As the name suggests, Fixed loans are the loans derived upon fixed interest rate for a definite period of time. To explain it in simple words, Interest rate and monthly payment remain the same across the term as stipulated during the loan formation for a stated period.
Fixed rate loans in the past had been associated with having firm conditions as to having a limit to make any extra repayments that the borrower can possibly make. However, with recent trends, it can be observed that the limitations have easily been surpassed by better benefits received in fixed rate loans such as relatively lower interest rate, flexible new products as a result of which fixed rate loans have become quite popular across Australia.
Basic Loan
Basic home loans are a choice of loan rates allowed to the borrower wherein they get to choose and have an option to trade off flexibility in turn of lower than normal ongoing interest rate, lower or no ongoing fees and often a reduced or waived application fee. This type of loan has minimal features and generally doesn’t offer an offset account, repayment holidays, ATM card, cheque book or Bpay. If you are after a simple loan that is easy to use, then the basic home loan would be well suited to you.
All these sorts of benefits are provided to the loan borrowers which are required to be discussed with the broker and hence after implied on the loan.
Variable Loan
Variable loan offers a variable interest rate as to which the monthly payments fluctuate over the course of loan term. The change in variable interest rate is coherent to the change in industry market rate brought upon by changes as the Reserve Bank of Australia’s (RBA)cash rate moves. Normally a variable loan comes with the offset account. Variable loan can also be segmented upon Basic Loan.
Offset Account
A 100% offset account enables you to pay off your loan sooner by reducing your interest payments. It works by only charging you interest on the balance of your home loan less the balance of your offset account. It is a facility provided by the lender to the borrowers where an offset account is allotted as to the use of which borrowers can extensively benefit from lesser than lower repayment required to be done based upon the amount deposited in the offset account.
Line of Credit
A Line of Credit is a credit facility extended by a bank or other financial institution to a government, business or individual customer that enables the customer to draw on the facility when the customer needs funds. A line of credit (LOC) mortgage allows you to use the loan as your cheque account so you can draw down and repay the loan as you choose. With an already approved limit on LOC, the borrowers gain flexibility to use the money when required without the need to reapply.
You can also use the line of credit to carry out renovations, pay your bills or invest in shares. It’s similar to a credit card in that it allows you to withdraw funds at any time up to a set limit.
To ascertain if an applicant is eligible for Line of credit, banks and other financial institutions have some mandated guidelines after the completion of which the process is taken further ahead.
Interest Only
With interest-only, you are paying just the interest on the loan – you are not paying off any of the original principal. Many investors prefer to have interest only investment loans as this reduces the drain on their monthly cash flow and allows them to better allocate their money to buy new investments or to fund their lifestyle.