What Type Of Loan Is Right For You?

April 01, 2014
Ian Robinson

The array of mortgages available helps a good credit adviser to tailor a package to suit your needs. Here are just some of the options. 

 

Fixed-rate mortgages: With a fixed-rate loan, you know exactly how much you’ll pay per fortnight or month for the fixed period of the loan (usually one to five years). 

 

Variable rate mortgages: Repayments can change during the life of a variable-rate loan, so you may pay more or less as interest rates rise or fall. If you’re fairly sure that rates are set to fall, this is a good option. 

 

Principal and interest mortgages: In this mortgage, you are paying the amount lent to you plus the interest. 

 

Interest-only mortgages: With interest-only, you are paying just the interest on the loan – you are not paying off any of the original principal. 

 

Split home loan (fixed and variable): You can choose to have part of your loan at a fixed rate and the other part can be at a variable interest rate. If rates do fall, the interest will go down on the variable part of your loan, but you aren’t taking as big a risk should rates rise. 

 

Redraw facility: If you have a variable-rate loan and you make extra repayments, then you can withdraw that additional money when you need to (you can’t do this on fixed-rate loans). 

 

Land loan: A land loan lets you buy a block of land without the pressure to build on it as soon as possible. Land loans are usually variable interest for up to 30 years. 

 

Construction loan: For buying land, building or renovating your home, a 12-month construction loan can be the best way to go. Usually, up to 90 per cent of the property value can be borrowed. 

 

Non-PAYG loans: For self-employed people, a home loan can still be arranged using differing supporting documentation that shows your ability to service a loan and might include BAS and bank statements. You self-certify your income, which will need verification. You may be able to borrow up to 80 per cent of the property’s value. 

 

Equity release: This loan type allows you to convert a portion of your residential property ‘asset’ into cash or an income stream while still allowing you to continue to live in your home. 

 

Posted in: Home loans

Contact us today.


Additional Comments? * :