At the home loan market there are more than 300 different products and addition to those almost every day we see some new products are launched. KRT Mortgages broker by taking your condition and specific requirements into consideration will matchup and tailor a loan that suits you and your goals.
Below we have briefly explained the different types of available home loans; whenever you are ready to discuss your options with us we will review the available loan products against your requirements and conditions and try to find the suitable home loan for you. If it’s the time please contact us.
Basic Variable (Principal and Interest) home loans
The rate charged on a Basic variable loan moves up or down in accordance with movements in interest rates. In result the repayments rise or fall.
Basic variable loans generally have fewer loan features than a standard variable loan.
Basic variable loans are suitable if you are looking to pay off a consistent amount over the full term of the loan, but are not suitable if you are looking to pay off your mortgage quickly.
Standard Variable (Principal and Interest) home loans
Repayments rise or fall when official interest rates rise or fall.
Standard variable loans offer flexibility and additional features, such as the ability to make additional payments, redraw facility (take out any extra money that you have put in) and Offset Account.
Allows borrower to pay off the mortgage quickly by not having any penalty for advance payout.
Higher interest rate is higher for standard variable loans than basic loans because of the additional features.
Fixed Standard Variable (Principal and Interest) home loans
A fixed rate home loan is a loan that has a fixed interest rate and therefore fixed repayments for a period of the time.
The time period of these loans are usually 1-5 years but the total length of the loan itself will be 25 or 30 years.
At the end of the fixed loan period borrower can decide whether to fix the loan again for another period of time at the current market rates or convert the loan to a variable interest rate for the remaining time of the loan.
Repayments do not rise if the official interest rate rises or do not fall if rate falls.
At the time that interest rates are rising provides peace of mind for borrowers who are concerned about rate rise.
Allows only limited additional payments.
Early payout of the loan will be penalised.
Interest Only home loans
Barrower repays only the interest on the principal during the term of the loan- usually 1 to 5 years- therefore, repayments are lower than a standard principal and interest loan.
At the end of the interest only period barrower must start making Principal and Interest Repayments over the remaining term of the loan.
Due to the Lower repayments initially barrower has more money for any other expenditure such as renovating or improving the property.
Interest Only Loan Cuts the cost of monthly or fortnightly payment of investment property for period of the term, which could allow barrower to make more contributions to his/hers principal place of residence.
At the end of the Interest Only period, when the loan converts to Principal and Interest, there will be sudden increase in repayments.
Lenders usually assess barrower’s ability to repay the loan on the principal and interest repayments. This can reduce the borrowing power, as these repayments will be higher when a loan is on Principal and Interest for the full term.
Introductory home loans or oneymoon Rates
The interest rate is usually lowest available rate to attract borrowers.
This rate generally lasts only for around 6 to12 months before it rises. Rates can be fixed or capped. Most revert to the standard rates at the end of the period.
Regular payment at the introductory rate can reduce the principal quickly.
Some lenders provide an offset account against these loans.
Low-doc home loans
A low-doc or no-doc Loans are a flexible solution mainly for self-employed with income and assets who are unable to provide the required financial statements or tax returns at the time of applying for a home loan.
No tax returns or financial statements required, only simple income declaration form needed.
These loans come with different loan options and features such as redraws, offset account, line of credit, Variable or fixed rates, Principal & Interest or Interest-only loans.
Low-doc or No-doc loans generally have a higher interest rate.
Line of Credit home loans
The equity that has been built up in owner occupied home or investment property can be used as line of credit.
Line of Credit is type of property loan that allows access to funds when needed and can provide complete finance control.
Barrower can use the money when is needed and pay it back when he/she can. There is no minimum repayment.
Usually has higher interest rate than normal home loans but is lower than credit card or even personal loan.
To keep the cost down it’s advisable to reduce the balance of the Line of Credit account regularly otherwise can be very expensive.
Any money in Line of Credit account earns interest, if the balance is in credit.
Split Rate (Principal and Interest) home loans
A split rate loan is a loan that barrower can choose to fix one portion of the loan and leave another portion as variable.
Additional payments can be made to variable portion.
Helps in budgeting and provides peace of mind for barrower in time of the rate rise.
Provides some peace of mind for borrowers concerned about rate rises.
Provides more certainty in budgeting than full variable loans.
Can make additional payments on variable portion.
Variable portion repayments will rise with rate rises.
Bridging Loans
Bridging Loan is for someone who has found his/her dream home to buy but hasn’t sold the existing property yet.
Bridging Loan features vary from lender to lender, for more information pleasecontact us.
Non-conforming home loan
Some lenders offer ‘non-conforming loans’ for people with poor credit rating who often have trouble finding a home loan.
While lenders are willing to overlook prior credit problems, they will want to see some evidence of your ability to repay the loan. A larger deposit than is required for traditional loans will generally be required also.
Higher interest rate than traditional loans.
No deposit home loan(Due to the global finance crises this type of the home loan is disappearing from lenders product list)
Some lenders offer loans that do not require a deposit. However, the barrower needs to be in secure employment and able to provide solid proof of his/her ability to make payments.
Allows buyers to get into the market sooner.
Have you found your dream house & looking for finance?click here