| Loan Type |
Feature and Benefits |
Additional Considerations |
| Variable Rate Home Loan |
Rate will vary or fluctuate with changes to the official cash rate.
Variable rate loan is suitable in a low and falling rate environment as the borrower has the potential to take advantage of any fall in interest rates. |
Flexibility, choice of principal and interest payments or interest only. Make additional payments whenever you wish. |
| Fixed Rate Home Loan |
Fixed rate home loans protect against interest rate rises. A fixxed rate provides the home buyer with certainty of a set monthly repayment.
|
Restrictions on additional repayments usually apply. May incur break costs for early repayment prior to the end of the fixed rate term. |
| Split Loan or Combo Loan |
The usual split loan is a combination of a fixed rate loan with a variable rate loan thus giving the borrower an “each way bet”. Another combination is either a fixed/variable rate loan with a line of credit. |
Flexibility and choice. |
| Line of Credit |
Repayments are interest only and you only pay for what you use. You can choose not to pay any repayments and let your interest capitalize. When you reach your 100% interest payments are required |
Flexibility - usually comes with cheque book. Can be at a higher interest rate. |
| Equity Loan |
A line of credit loan that frees up the equity you have in your property into a line of credit that you can use for any legal purpose |
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| Residential Construction Loans |
A loan to help you to build a new home or investment property. The loan amount is not credited to you upfront. Instead the money will be made available through up to 5 progressive payments paid directly to the builder. |
Drawing down the loan with progressive payments means that you will make payments of interest only until the loan is fully drawn. Once the loan is fully drawn the repayments usually revert to principal and interest. |
| Lo Doc Loan |
A loan designed for self employed people who are unable to provide all the documentary evidence about their income that banks usually require. |
The maximum borrowing is usually at 80% of the value of the property. May have a loading added to the interest rate. |
| Pre-Approval |
A borrower is approved to borrow a certain amount and where the lender has done all relevant credit and income checks. The only outstanding item is the security. |
Essential for borrowers going to auction or wanting to speed up the loan process once they have found a property to buy. |
| Equity Finance Mortgage (EFM) |
An EFM provides up to 20% of the value of an owner occupied property at a zero interest rate and no monthly repayments in return for a share of any increase in the value of the property when the loan is repaid. |
Can be used to reduce the upfront and ongoing costs of home ownership and/or allow borrowers to purchase a more expensive property. |
