Various Types of home loans - Tricord.com.au

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Types of home loans - Tricord.com.au

• Are you looking for the information regarding to
  various Types of home loans available in
  Australia? Then please visit the tricord.com.au
  because we are providing the great information of
  various type of home loan like Standard Variable
  Loans, Fixed Rate Loan and others too.

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Standard Variable Loans

• A standard variable loan is one of the most
  common types of home loans in the country. It
  comes with a standard variable interest rate,
  which varies from time to time. The movement of
  this home loans interest rate is mainly
  dependent on the official cash rate set by the
  Reserve Bank of Australia.
• You can benefit from this type of home loan
  because it is often flexible, with options like
  extra repayments and access to redraw facilities.
  One feature that you can take advantage of is
  once interest rates fall, you will also have
  lower monthly repayments. But take note that
  monthly repayment also increases as interest rate
  rises.
• Advantages
• Flexible, with added options
• Decrease in repayments when interest rates go
  down
• Lenders usually allow repayments
• Access to redraw
• Disadvantages
• Increase in repayments when interest rates go up

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Fixed Rate Loan

• If you are a borrower who wants to know how much
  exactly you are going to pay throughout the loan
  term, this type of home loan is for you. With a
  fixed rate loan, your repayments stay the same
  even if theres a change in the interest rate.
  This is perfect if you dont want to be exposed
  to interest rate changes. Fixed rate loans allow
  you to have a fixed interest rate for a specified
  period of time, e.g. one to five years. The
  downside is you do not have the advantage of
  lower repayments if the interest rate falls
  during the specified period.
• Advantages
• Lower repayments interest rate
• Disadvantages
• Lesser features and flexibility

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Basic Variable Loan

• This type of home loan works like a standard
  variable loan, only with lesser features and
  flexibility. You can still have the option to add
  features, but it will involve extra cost.
  Typically, you will have to pay for every
  additional feature you will require. Basic
  variable loans may have lesser features and
  flexibility when compared to standard variable
  loans, but generally come with a lower interest
  rate.
• Advantages
• Repayments stay the same even if interest rate
  rises
• Disadvantages
• Repayments stay the same even if interest rate
  falls
• You might have to pay penalty fees for any
  additional payments

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Split Loans

• If you want to have the best of both worlds, you
  can have a split loan, which is a combination of
  a fixed and a variable loan. A split loan is the
  type of home loan for those who want to take
  advantage of a fixed interest rate, but also want
  to a lower interest rate when interest rates go
  down. With a split loan, you can control your
  interest rate risk by having a mix of repayment
  options.
• Advantages
• Redraw facility
• Decreased vulnerability to interest rate changes
• Disadvantages
• Repayments still increase when on the variable
  component

6
Line of Credit Loan

• Unlike other home loans that provide you lump sum
  amounts, construction loans allow you to draw
  money as you need it, usually after each building
  stage. Construction loans start with interest
  only repayments and once the construction is
  complete, you will start paying both principal
  and interest as monthly repayments.
• Advantages
• You can make additional payments
• You only pay interest during the construction
  period
• Disadvantages
• Has variable interest rates
• Often not flexible since it requires a fixed
  price before the construction

7
Honeymoon Loans

• Honeymoon loans offer lower initial repayments
  for a specified period of time, which is usually
  the first year. You will have a guaranteed low
  interest rate during that period, which can be
  fixed or variable. The loan will revert to
  standard variable rate when the discount period
  is over.
• Advantages
• Offers low interest rate during the honeymoon
  period
• Disadvantages
• Higher variable rate after the discount period
  is over

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Construction Loans

• Unlike other home loans that provide you lump sum
  amounts, construction loans allow you to draw
  money as you need it, usually after each building
  stage. Construction loans start with interest
  only repayments and once the construction is
  complete, you will start paying both principal
  and interest as monthly repayments.
• Advantages
• You can make additional payments
• You only pay interest during the construction
  period
• Disadvantages
• Has variable interest rates
• Often not flexible since it requires a fixed
  price before the construction

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Low-Doc Loan and Credit-Impaired Loan

• If you are worried that you cant get a home loan
  because you dont have the necessary tax
  documents, a low-doc loan can be the answer to
  your dilemma. Most self-employed individuals
  prefer this type of home loan when they cant
  comply with the usual mortgage requirements. On
  the other hand, a credit-impaired loan works
  great for those who have impaired credit history.
• Advantages
• Easy documentation requirements
• Flexibility (choice of fixed or variable
  interest rate)
• Features (line of credit, redraw, etc.)
• Disadvantages
• You can be charged with higher interest rate
  than most loans

10
No Deposit Loan

• Want to buy your new home sooner than later? This
  can be possible through a no deposit home loan.
  If you dont want to wait until you have enough
  savings for a deposit, a no deposit loan will
  work great for you. This type of home loan allows
  you to borrow up to 100 of the purchase price of
  the property.
• Advantages
• You dont have to save for a deposit
• You can borrow up to 100 of the property price
• Disadvantages
• Lenders mortgage insurance (LMI) can be costly

11
Guarantor Loan

• This type of home loan allows you to borrow up to
  100 of the propertys purchase price. A
  guarantor loan works great if you dont have
  enough savings for a deposit. A guarantee from
  your parents, sibling, spouse, or grandparent
  will be accepted by most banks and lenders.
• Advantages
• You can borrow up to 100 of property price
• Disadvantages
• Interest rate can be higher than typical home
  loan

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