A Variable Rate home loan has in the past been the most common product among Australian borrowers. This product has the most features and advantages of all loan products giving it the most flexibility for your ongoing needs. However, on most occasions, you will pay a higher interest rate for this because of features that you may not necessarily need.
The Base Rate Home loan is a no frills version of the Standard Variable Rate Home Loan.
The majority of the features offered under the Standard Variable Rate Home Loan have been reduced from this product which in turn reduces the interest rate payable by you.
A honeymoon loan, or introductory rate home loan as it is sometimes called, is a product that offers a reduced interest rate for the initial period of the loan. The reduced rate may be for 3, 6 or 12 months at which time the product switches to the Standard Variable Rate Home Loan.
These loans are promoted by the lenders in an attempt to attract those clients that are sensitive to Interest Rates and base their loan decision solely on this. This product is not a preferred option as whilst you may get the benefit of a reduced interest rate of 1% for the first 12 months, you will then pay the standard variable rate for the remaining life of your loan.
A fixed Rate Home Loan allows the client to FIX their loan for a pre determined period of time up to 10 years.
When fixing a loan, you have a fixed repayment at a fixed interest rate for a fixed period. The target market for these loans is clients that are on a fixed income and want the certainty of knowing what their repayments will be for the life of their loan.
The disadvantages of these loans are that a lot of lenders will not allow lump sum reductions to your loan without incurring a penalty.
An Interest only loan is one in which you have a reduced repayment because you are paying interest only with the principle portion of your loan to be paid out at the end of the loan period.
An Interest in Advance Loan is another type of Fixed Rate loan in which the borrower pays a full twelve months interest at drawdown of the facility.
A Line of Credit Facility is becoming increasingly popular with Borrowers throughout Australia because of the continued flexibility it can bring to one’s financial situation.
Most borrowers with this facility have their entire wages paid into the loan and live off their credit card for their day to day living expenses. When the credit card payment is due, they simply redraw funds from the loan to pay out the card balance and then start again for the following month.
A Foreign Currency Home Loan is a flexible option for borrowers who have their main income streams outside of Australia.
Payments for these loans can be made quarterly or half yearly and the loans are available in US Dollars, Hong Kong Dollars, New Zealand Dollars, Great British Pounds, Singapore Dollars or Euro Currency. Normal loan assessment criteria applies.
A bridging loan is utilised for those borrowers that have an existing loan and need short term finance to purchase their new property prior to their existing one selling.
Lo Doc and No Doc loans are predominately for the self employed borrower that for one reason or other is unable to substantiate their income.
These loans only require a self declared income statement to be signed by the borrower in order for the lender to assess their application.
Specialist lenders are available in today’s market to assist those people that have had past credit impairment.
The interest rate is determined by the level of credit impairment.
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