Helping you choose the right loan.
Today in Australia there are literally hundreds of different home loan products on the market. All offering different features, fees and rates. They generally fit into the following different types of loans that we have listed below. We're here to help you choose the right home loan product that best suits you. Contact Custom Mortgage today to arrange to speak to your home loan specialist.
Standard Variable Loan
The most common type of home loan that can offer a number of features and flexibility. With a variable loan, the interest rate can vary throughout the term of the loan. An increase in rates increase repayments, falls in rates decrease repayments. You can have the ability to make additional repayments. The loan term is normally 25 or 30 years.
Basic Variable Loan
A new variation on the standard variable loan, it's a basic version which offers lower interest rates, but has fewer features and is not as flexible. Interest rates and repayments can still vary over the term of the loan.
Fixed Rate Loan
A fixed rate loan is for those who want to know exactly what their repayments will be over a set period of time. It gives you great peace of mind over that period. Repayments are not effected if interests rates increase, but at the same time, if rates go down, the fixed rate still remains the same. You can choose from a one to five years fixed rate loan.
This loan has a low interest rate to attract borrowers. The interest rate has been discounted for the first period of the term. This introductory rate generally lasts for the first six or twelve months, before it rises and reverts to a standard variable rate. During the introductory period, it's a great opportunity to pay off the loan as quickly as possible with additional repayments.
Bridging loans are short term loans that allow you to buy a new property even if you haven't sold your existing one. They offer standard interest rates and generally you have up to six months to sell your existing property. You must have sufficient equity in your existing property to be eligible for this type of loan.
100% Offset Account
A 100% offset account is a savings account linked to a loan account. No interest is paid to the offset account, instead the balance of your offset account is deducted from your loan account before interest on your home loan is calculated. Therefore less interest is charged to your loan.
This is how it works:
- Outstanding amount owed on a home loan is $160,000. Balance in the offset savings account is $10,000.
- Interest is only charged on the difference. $150,000.
- The balance in the account is offset against your loan. The more money you keep in your account, the faster your loan is reduced.
Split Loans can give you the certainty of a fixed rate, with some additional flexibility. Borrowers can choose a proportion of the loan to be set at a fixed rate and a proportion at a standard variable rate. These loans offer protection against potential rate increases plus the benefits of lower rates and flexibility.
Loan with a redraw facility
A redraw facility with your loan enables you to put extra money into your loan. You can also take the money back out again, if you need it. The extra payments can significantly reduce your interest payments therefore reducing the life of the loan. This type of loan is worth considering if you believe you will be able to make additional payments to your mortgage.
Line of credit
Designed to give you the maximum flexibility with your finances a Line of Credit loan is not dissimilar to a large credit card facility. With this type of loan, you pay all your income into one loan account. The money goes to pay off your loan, but you can also access the funds as an all-in-one cheque, credit and savings account. Money kept in the account helps reduce your loan amount and interest charged to the loan. Interest rates tend to be higher than standard variable rates.
With a Line of Credit, as with a credit card, you only pay interest on the money you use.
This type of loan is best suited to people with a large disposable income, as it can assist them in paying off their loan sooner.
For use with many different investments, including property, shares, land, these loans can be structured in a variety of ways and Custom Mortgage can help to select the right loan for your investment strategy.
Lo Doc Loan
Lo Doc Loans have been established for borrowers who would normally not comply with the regular guidelines and assessment for a standard home loan product. They are ideal for the self employed, people with irregular income and those who don't have up-to-date financials.
There is no proof of income documentation required, however you must complete a self-assessment declaration and have a clean credit history.
Today, lenders offer a full range of features within their Lo Doc products, but interest rates are generally higher than standard variable rates.
No Doc Loan
Similar to Lo Doc loans, these loans however do not require verification of income. They are interest only loans with a term of 2-3 years, suitable for investment only and not available for the traditional owner occupier. Interest rates and fees are higher than a standard loan.
For people who have experienced financial problems in the past, this loan helps re-build credit rating. Non-conforming lenders are very flexible, however you pay a higher interest rate and fees. A minimum deposit of 10% is required.
Available to people over the age of 60, it enables you to unlock any built up equity in your home, for your own use. Funds can be made available in one payment or as needed. There are no repayments required over the life of the loan. The loan plus accrued interest and charges are repaid when the property is either sold, the borrowers no longer live at the property, or are deceased.
It is important that any person considering a reverse mortgage seeks independent financial and legal advice.
Contact Custom Mortgage
You can easily contact Custom Mortgage, either by telephone on
(08) 8342 2212 or by email. You can always send us an email, let us know your contact details and the best time to contact you, and we'll give you a call. Email us your details