Residential Home Loans
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, implied on the loan thereafter.
Variable Loan
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.
The majority of lenders however will only allow a 5 year interest only period, with a select few offering 10 years and only two offering a 15 year interest only period.