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Loan Types
There are literally thousands of different home loans on the market, all with different rates, fees and features. If you haven't already decided, we have provided the following types of home loans that might be suited to your situation. For a more detailed valuation of your current position, contact a Mortgage Specialist to arrange an appointment today.
Basic loan
The most common type of finance, the Basic Home Loan is suitable for Owner Occupied or Investment properties. Basic Home Loan's offer a variable interest rate, that rises and falls with the market, however is usually below the standard variable rate. Basic Home Loans often have restrictions on their features, or don't offer the same level of flexibility as a Standard Variable Product. Nonetheless a Basic Home Loan is a great way of taking advantage of a lower interest rate without having to lock into a fixed interest rate over a specific term.
Bridging loans
A bridging loan (or relocation loan) is a short-term loan that covers the gap between purchasing your new property and selling your old property. Usually bridging loans have a term of six months for you to sell your property.
Low doc or no doc loan
A low-doc or no-doc loan is ideally suited for investors or self-employed borrowers looking to refinance, purchase or renovate. No tax returns or financial reports are required.
Introductory rate loan
The interest rate is usually low to attract borrowers. Also known as a honeymoon loan, this rate generally lasts only 1 year before it rises. Rates can be fixed or capped. Most revert to the standard rates.
Construction loan
A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.
Fixed rate mortgage
The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original fixed rate period.
Line of credit/Home equity loan
Line of credit facilities or Home Equity Loans allow borrowers to gain access to the accumulated equity that they have in their properties. The Line of credit facility limit is normally determined by the value of the security or property that is being offered. A major feature of these facilities is that they allow the borrower to redraw their facility back to the original limit, they even allow the borrower to go between a credit and debit balances. These loans are known as Revolving line of credit facilities, they are similar in operation to the common overdraft. Most Line of Credit facilities allow for the borrower to operate their loan account as their transaction accounts, thus achieving an "all in one" account. Normally the borrower has their wage or salary deposited directly into the facility, which reduces their balance, thus reducing their daily interest charge. The borrower would then normally pay all their bills using a credit card, and access cash from their line of credit facility from a cheque book, ATM card etc.
Non conforming full doc loan
The Non Conforming product is designed to assist borrowers who are currently in arrears, bankrupt, have paid or unpaid defaults, court judgments or any other adverse notations on their credit file. This loan is suitable for PAYG or Self Employed borrowers who are wishing to purchase an owner-occupied or investment residential property or borrowers wishing to consolidate their debts, refinance or basically any worthwhile purpose.
Mortgage offset account
A Mortgage Off-Set Account is a savings account linked to a loan account. No interest is paid to the Mortgage Off-set Account but instead less interest is charged to your loan.
Standard variable rate loan
These loans are a variable rate product that usually offer extra features such as a 100% offset account. If your loan size is large enough, many lenders will offer considerable discounts on the standard variable rate (see 'Discount Packs'). Lenders usually use their standard variable interest rate as a 'benchmark rate' and many of their other products are on an interest rate that is a set margin either above or below it, e.g. a basic variable product may always be 0.5% below the standard variable rate and a line of credit may always be 0.1% above it.
Professional Packages
Professional packages are designed to attract new business by offering discounts on both variable and fixed rate home loans for eligible borrowers. To qualify you generally need to borrow a minimum amount or in some cases be a member of a professional organisation. It's well worth considering these options as they often offer benefits on other banking products as part of the package. These can include fee-free banking, insurance discounts and reduced application fees.
Helping you with Home Loans
There are some great deals right now due to strong lender competition that could save you thousands and some are negotiated at special rates available through Mortgage Avenue.
Contact Mortgage Avenue to make an appointment by calling us on
1300 885 008.
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