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Home loans can be divided in several categories and this is often what makes it difficult and confusing when you have to make a decision. For most people, an attractive interest rate is one of the most important features while for others, flexibility or security may be more important. Whatever your requirements are, you can be assured that your Citiwide lending specialist will find the right solution for you.
Standard Variable Rate Loan
A standard variable loan is one of the most common and popular home loans in Australia. As the name implies, the interest rate on these loans can vary at anytime depending on market conditions. Some features under this product include:
- 100% interest offset facility
- redraw facility
- additional repayments
- and in most cases no early pay-out penalties
A standard variable loan can usually be combined with other types of loans and are ideal for borrowers wishing to pay off their home loan faster.
Basic variable loans are often referred to as the ‘No Frills’ alternative to the standard variable loans. The interest rate is lower than a standard variable loan, making them attractive to the budget conscious. Generally, the 100% offset facility feature is not available on basic variable loans and the redraw facility may attract a fee.
So called because it generally offers a discount period at the beginning of the loan. The disadvantage of honeymoon rate loans is that after the initial period usually the rate will increase to an advertised standard variable rate.
These are loans where the interest rate is fixed, i.e. will not change for a set period of time. The most common fixed terms are from 1 to 5 years, however some lenders may offer longer terms.
A split loan is ideal if you are concerned about rising interest rates but also require flexibility as it allows you to take part fixed and part variable. You can decide how much of the loan you would like to fix and how much you would like to leave on a variable rate.
A line of credit provides you with access to the equity in your home or investment properties whenever you need it. It is similar to an overdraft facility in that funds can be withdrawn up to the original loan amount approved at anytime. The interest rate on a line of credit facility is usually a variable rate that fluctuates with the market. A line of credit provides you with easy access to funds ensuring peace of mind in times of need.
As the name implies, you are required to pay only the interest on this type of loan. The loan is generally structured with an initial term ranging from 1 to 5 years during which no principal reduction is required on the loan. At the end of that initial period, the lender will generally rollover the loan into a principal and interest repayment (unless you request otherwise) for its remaining term which can be up to a total of 30 years.
This type of loan is more suited to the property investor as opposed to the owner occupier and the interest can be either fixed or variable.
These loans are suitable for borrowers who, at some stage, have had their credit history adversely affected by, for example, one of the following scenarios:
- One or more credit defaults listed against them by a lender or service provider.
- One or more judgements listed against them by a lender or service provider.
- A poor repayment history on a loan that may need refinancing.
Any of these circumstances may deny the borrower the chance of obtaining credit from the traditional lending channels, namely banks, building societies and credit unions. Fortunately, there are certain specialist lenders who are prepared to consider loans to these borrowers. Generally, the interest rate is based on the risk profile of the applicant and is usually higher than traditional loans.
For more information call us on 1300 732 630 or contact us using our Online Enquiry Form.