In this competitive market with a large range of loan products which loan suits YOU. Here are some of the different loan products that might suit your needs.

 

Variable Loan

 

Variable loan allows you to put as much extra repayments as required but the interest rate does vary which comes from the discretion of the reserve bank or the lender. It is a loan in which the interest rate charged on the outstanding balance varies as market interest rates change. As a result, your payments will vary as well (as long as your payments are blended with principal and interest).

 

Fixed Loans

 

Fixed rates are locked in for the period you request example 1,2,3,5 or 10 years. If interest rates do go up or down your interest rate will not be affected. Please note most lenders have a cap on how much extra repayments you can put on top of your normal monthly repayments. It is a loan in which the interest rate charged on the loan will remain fixed for that loan's entire fixed term, no matter what market interest rates do. This will result in your payments being the same over the fixed term. Whether a fixed-rate loan is better for you will depend on the interest rate environment when the loan is taken out and on the duration of the loan.

 

Line Of credit

 

Line of credit facility is where the lender gives you a limit against your residential property example property value is $400K lender allow’s a limit of 80% of your property value which is $320K the lender will allow you to draw up to the limit & will only charge you interest only on the outstanding balance you owe at the end of the month. 

 

The advantage of a line of credit over a regular loan is that the interest is not usually charged on the part of the line of credit that is unused, and the borrower can draw on the line of credit at any time that he or she needs to, depending on the agreement with the financial institution.

 

Introductory loans 

 

Where the bank allows you a special interest rate for the first 12 months or 3 years, then it will revert back to the interest rate stated on that product through that lender.   Borrowers should not make a loan choice based only on an initial interest rate. While a loan with an initial low interest rate can seem attractive, low initial interest rates may lead to a higher interest rate after the initial rate period expires.

 

Redraw loans  

 

Redraw loans allow you to access the extra money you put on top off your normal repayments for your loan. Minimum redraw amounts vary from loan to loan. Redraw is not available on Fixed Rate Loans.

 

Offset loans  

 

Offset loans allow you to have your normal savings account linked to your home loan so it saves you on interest example if you have a $200K home loan & $10K in your offset account you are only paying interest on the balance which is $190K.  If you want to pay off your mortgage sooner, a home loan with an offset facility can be a quick and simple option.  It allows you to make the most of your income and other funds to reduce the interest payable on your home loan, thereby reducing your loan term.

 

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