There are basic types of loans that lenders offer and that are available for property purchase. Each lender has their specific name for their product and each will operate a little differently from any other but what follows is a brief outline.
This is your standard loan that we all have become accustomed to over the years. You select the term that you wish it to run and decide whether you would like a fixed or variable rate. Usually the fixed terms run between 1 to 5 years although a couple of lenders do offer up to 10 years. Quite often you will also have the option of an initial interest only period of generally up to 5 years.
As the name suggests this facility is a Line of Credit, which means the bank will approve a Limit using your property as security (generally 80% of the value). You are free to draw on this facility up to its approved limit. Most often the facility comes with a Chequebook and debit card for ease of access to funds. These loans are interest only and have no term attached, however is reviewed annually. The interest is charged monthly to an account you nominate.
This facility suits an investor as they are most often advised to get an Interest only loan but can also be used for Owner Occupied purposes.
It has a high level of flexibility in that you can deposit surplus funds into it and draw on it as required without notifying the bank as long as you stay within your approved limit.
It allows you to credit your income into it to reduce interest costs. However, interest rates tend to be higher than standard variable rates.
This loan has a bit of everything and provides the maximum flexibility of all loans. The loan is set up with sub-accounts so you can separate your different lending requirements and each account can be tailored with the features you need to suit the occasion. For example, let’s say Account 1 is your home loan and you might like to have it as a principal and interest loan with a 3 year fixed rate, Account 2 could be $30,000 Interest Only line of credit on variable interest and used for say your share trading and Account 3 could also be an Interest Only loan with a 5 year fixed rate for the investment property. The Multi Account Loan and the Line of Credit Loan usually have a higher interest rate than a standard amortising loan – this is a charge for the added flexibility and complexity.
Low doc home loans are designed for borrowers who don’t meet the usual income verification policies for a standard home loan product, such as people who:
- Earn irregular income e.g. self-employed
- Have difficulty separating personal and business cash flows
- Don’t yet have up-to-date financial statements.
In recent years it’s become more difficult to access low doc loans. Borrowers need to offer substantial equity in the property, have a clean credit history and more. We can work through these with you.
A family guarantee can help borrowers enter the property market for the first time, ‘trade up’ or buy an investment property.
A family member offers security (usually their home for the amount needed to borrow, it can mean:
- No deposit is required
- Reducing or avoiding paying Lender’s Mortgage Insurance.
LET’S GET STARTED
To finance your way to success today