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Currently in Australia, we are enjoying an increasingly competitive lending market.
Local and international banks, building societies, credit unions and all manner
of specialist lenders are vying for our attention and offering us a seemingly endless
array of home loan options. Features include loans with introductory rates, standard
variable rates, fixed rates, redraw facilities, 100% offsets, line of credit loans,
professional packages etc etc.
Speak with the team at Breakaway Finance Group and they will find the best loan
for your situation, taking into account your financial position today and what your
future plans include.
Below is a summary of different types of home loans available.
Standard Variable Home Loans
Standard variable loans are the most popular home loan type in Australia. The interest
rate on this loan is in direct contrast to the rates set by the Reserve Bank of
Australia. If the R.B.A. increases their rates by .25% this will be passed on to
the borrower by the credit provider. Only recently, with the sub-prime chaos in
the US have we seen major banks increase their rates without the RBA increasing
theirs.
Different Lenders offer different features and rates on these products.
These loan types often include redraw facilities, 100% offsets and allow the borrower
to make additional repayments. Usually borrowers have the flexibility to repay weekly,
fortnightly or monthly.
Low/No Documentation Home Loans
Low documentation loans require very little or no income documentation to get approval.
They are typically used by borrowers who are self-employed or do not have tax returns
or financial reports and are unable to substantiate their income. Breakaway Finance
Group offer competitive rates that don’t penalise your situation through our white
label product.
Line of Credit Loans (L.O.C.)
Line of credit loans are useful to the investor or business owner who requires
access to additional funds at any given time. In some cases you can have a combination
of your home loan (either standard variable or fixed) and a L.O.C. portion for further
investment use.
Fixed Rate Home Loans
Fixed-rate loans are where the borrower's interest rate and repayments are fixed
for a set period, usually from one to 5 years. These home loans generally revert
to the standard variable rate when the fixed-rate period has expired. These loans
are ideal for those people who like predictable payments or those who expect the
interest rates to rise during the course of the loan and want to lock in a rate.
The Fixed rate home loans can be a useful tool for the investor who wishes to know
their outlay on a monthly basis.
Introductory Home Loans
These are variable rate loans with a discounted interest rate lasting a certain
period of time, usually one year. They will normally revert back to standard variable
rates at the end of an agreed period. Sometimes, depending on the lender, interest
rates can be fixed or capped during the initial/honeymoon period. The borrower must
however look at the reverting rate after the introductory period and costs associated
with breaking this facility at the end of the industry period.
Combination Home
Combination Loans or split loans allow borrowers to take part of their loan as a
variable rate loan and the other part as a fixed-rate loan - split in whatever percentage
the borrower requires. These loans offer borrowers a chance to hedge their bets
when interest rates are rising and provide flexible repayments and interest rate
security. These loans are viable for the home owner as well as the investor.
Non-conforming Home Loans
Specialist lenders offer non-conforming loans to people who don't meet the banks'
traditional lending criteria for one reason or another. These include people with
a bad credit history, perhaps with a history of late repayments, or even formerly
bankrupt. Breakaway Finance Group has a range of credit providers that will best
suit your needs according to your circumstances.
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