Types of Loans
STANDARD VARIABLE RATE
A standard variable rate loan offers a mixture of features and flexibility.
This type of loan is particularly suitable if you want to make extra repayments without penalties or utilise an offset account.
BASIC VARIABLE RATE
Basic Variable Rate loans offer a lower interest rate but fewer features. However, you usually have the option to pay for additional flexibility and features when you need them.
FIXED RATE LOANS
Fixed Rate loans protect you against interest rate changes for an agreed time; therefore, you have peace of mind knowing your repayments will not increase during this fixed period. However, you need to be aware that rates may go down during this term.
COMBINATION OR SPLIT RATE LOANS
Combination or Split Rate loans combine the flexibility of a variable rate and the certainty of a fixed rate so you benefit when rates drop and are protected when they increase.
NON CONFORMING LOANS
Non Conforming Loans have been designed especially to help borrowers who do not meet ‘standard’ lending criteria, including those who have an impaired credit history, those unable to provide the required documentation in support of their loan application or wish to borrow more than 100% of the property value.
HOME EQUITY LOANS
Home Equity Loans allow you to unlock the equity in your existing property for other opportunities such as renovating your home, investing in shares or managed funds or financing an investment property.
LINE OF CREDIT LOANS
Line of Credit loans are interest only variable rate loans that allow you to borrow against the equity in a home with the added flexibility of a transaction account built into the home loan.
ALL-IN-ONE LOANS
All-In-One Loans feature an everyday transaction account linked to your home loan. By keeping all your money in your loan account and only redrawing your living expenses as you need to, you can reduce the amount you owe. This in turn reduces the amount of interest you have to repay; making your money work harder for you.
LAND LOAN
Buy a block of land then build on it when you are ready. Make sure that the lender who does your land loan is also able to do a construction loan.
CONSTRUCTION LOAN
The lender pays the builder in installments as he completes your house. Your repayments gradually increase until the property is completed then with most lenders the loan automatically becomes a standard type.
REVERSE LOAN
As the name implies it is the opposite of a ‘normal’ loan. You do not need an income to qualify and no repayments are usually required until you sell or die. The loan would be either paid by you at the end of the loan term or by your estate. Consider retirees who do not want to sell their home but need some cash flow to improve their quality of life – either as a lump sum or a regular stream of income. Also you can assist beneficiaries enter the housing market by paying them an early inheritance. This type of loan is best discussed and considered in detail very carefully, as there could be implications if you are receiving a pension.
Please refer to the ASIC website for more information ( http://www.fido.gov.au/fido/fido.nsf/byHeadline/Credit )