RESIDENTIAL LOAN TYPES
A residential mortgage is the most common form of loan. This type of loan usually encompasses your first home buyer, families, couples and singles who are purchasing another home, or a borrower who consolidates their borrowings to save interest, and or duplicate fees and time.
'Basic Type' Home Loan
These products are generally offered by most financial institutions and provide a basic line of features with a reduced interest rate. These products are very popular and provide a great alternative to borrowers that don't require the 'bells and whistles' that the 'standard' products provide.
'Standard Variable' Home Loan
Most financial institutions offer this product as their mainstream home loan. The standard variable home loan offers flexibility and is generally has better features than a basic product. This loan can also be mixed with other types of products to form a combination loan, such as part fixed and part variable. The standard variable portion offers many attractive features such as salary crediting, redraw facilities, off-set accounts, additional payments, top-ups, construction loans and fixed rate options.
'Fixed Rate' Home Loan
Fixed rate loans offer security to borrowers in the event of interest rate rises. They can also hold you at a higher rate should interest rates fall. Taking a fixed rate option requires consideration of individual circumstances. Some people, due to employment situations, family constraints, or higher levels of financial commitment require stability in their loan repayments for the future. Taking a 'Fixed Rate' home loan can provide some peace of mind to borrowers.
Taking a fixed rate loan may mean that you are paying a higher interest rate than the current variable rate. Additional payments to your loan are usually not allowed during the fixed rate term, so this type of loan can be inflexible.
It has become very popular to fix part of your loan and create a 'combo loan' with a variable rate product. This gives some security for part of your loan and allows you the flexibility on the variable portion.
'Line of Credit' facility
A Line of Credit is a revolving facility that allows the borrower to reuse the facility at any time, once it has been repaid. The borrower can use any repaid funds right up to the original loan amount. The concept is not unlike a credit card, where you may repay and reuse any funds right up to the approved credit limit. This type of loan is very popular for the borrower that may require funds for future use such as investments, home renovations or wealth creation programs.
'All in one' loans
It has become popular for borrowers to use their home loan as their everyday bank account and have income paid directly into the loan. This type of loan is flexible and allows the borrower to withdraw surplus funds as required so their money is making use of reducing interest charges for the time that it is held in the loan account. Again, borrowers opting for this type of loan need to fully understand this concept to gain the real benefit of this facility.
The loans outlined above are only a few of the loan types available to you, making your choice even more important to ensure that you have made the right comparisons and considerations prior to committing to a particular loan. Our mortgage consultants will be able to assist in this process by comparing the loans available through our panel of lenders and offering further advice on the various loan types. Our mortgage consultants will also assist you packaging the required documentation so you can obtain a prompt answer from the lending institution you have chosen.
