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Types of
residential home loans with explanations
Discount Variable:
This is an introductory discounted rate offered by lending institutions
for an introductory period.
Example: If a current interest rate is 8%pa a bank will offer you lower
interest rate, 7.5%pa for a period of 6 months or 1 year. After this period
expires the interest rate will go back to 8%pa or whatever is current.
Variable:
A loan which fluctuates with the current rate.
Example:
Interest on your loan will follow changes in the loan market. If the interest
rate was 7%pa when you took the loan and a year later interest rate goes
up or down by 0.5%pa, your interest rate will be now 7.5%pa or 6.5%pa
respectively.
Fixed Rates:
The rate is fixed for a predetermined time.
Example:
You sign for a loan with a fixed interest rate, for example 7.5%pa per
annum for three years, no matter what changes there are in the current
market. At the end of the three year period you can either re-fix your
loan at the current rate or move to another choice. Usual fixed terms
are: (0.5; 1; 1.5; 2; 3; 4; 5 and 10 years)
Controlled Rate Loans:
Is a variable rate that moves between preset limits.
Example: Your loan has a ceiling rate and a floor rate. If the current
interest rate rises above your determined rate your interest rate will
not, but if the current interest rates drop below your floor rate your
interest rate will drop below your floor rate.
Combination Loans:
A loan split with a proportion of the loan on a fixed rate and the remaining
on a variable rate.
Example: Your loan is a combination of loans. You may have 50% of your
loan at a Fixed Rate and 50% as Standard Variable. If your loan is $100
000, then $50 000 of that loan will have fixed repayments and fixed interest
rate and the other $50 000 will go up and down with the changes in the
market.
Line of Credit All in One Account:
Allows the borrower access to funds up to an agreed credit limit. While
only paying interest on the balance.
Example: If your credit limit is $100 000 and your current balance is
only $80 000 you would have access to $20 000 at call. Asset Lending:
Loan secured against your assets. Example: For clients that have their
money tied up in assets. If you own a block of land and want to build
for a later resale you could have a loan up to 70%-80% of the value of
your land.
100%pa Interest Offset Account:
Operates similar to a line of credit facility.
Example: Your home loan is $100 000 and you have savings of $20 000 and
want to have access to those $20 000 at call. By placing your savings
in your 100% offset account you only pay interest on $80 000. Interest
is calculated on the difference between the two accounts on a daily basis.
Bridging:
Short term loan facility.
Example: A bridging loan is often used when you have a property for sale
and want to purchase a new property before the original property sells.
Deposit Bonds:
Allows for contracts of sale to be exchanged without the required minimum
deposit being paid.
Example: You have a property with equity you wish to use to purchase a
second property. On exchange of contracts a deposit of 10%pa of the purchase
price is required. As your deposit for the second property is in equity,
a deposit bond is required so the process for the second purchase can
take place.
Home Loans :: Refinancing, Land Loans, Non-Conforming Loans, Investment, Renovation, Construction Loans.
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Personal Loans :: Secured & unsecured loans. Car loans, equipment, holiday, wedding, etc
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Debt Consolidation :: Why not consolidate all your debts into one low monthly payment.
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Bridging finance :: For any business purpose. From $10,000 to $10,000,000. 1 hour approval.
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