Principal and Interest

• Designed to have the loan paid off in full over term chosen (called amortization)
• Loan term generally available up to 30 years
• Variable and/or Fixed rates allowed

Interest Only Loans

• Usually available for up to 5 years, although can be as long as 15 years
• These loans are often chosen by investors seeking to benefit from tax concessions e.g. negative gearing
• This type of Loan will revert back to a Principal and Interest Loan once the Interest Only period finishes, although some lenders allow loans to be re-set as Interest Only after this time.

Loan Splitting

• Many of the credit providers allow for “splits” or combinations of their particular loan products
• These can be set at Variable and Fixed rates
• Owner Occupied and Investment use permitted
• Owner Occupied and Business use permitted

Redraw Facility

• Facility allows for funds to be withdrawn from the loan that are in excess of the loan repayment schedule
• Available on a limited number of loan products, generally on variable rate loans only
• Terms and conditions vary widely between lenders
• Example - $2000 = minimum payment but customer pays $3000 per month. After 12 months the loan will be ahead or the repayment schedule by $12,000. These funds are available for use if required by redrawing the excess payments made from the home loan.

Some of the Loan types available are-

Basic Variable Home Loan

• These types of loans offer a “no-frills, low fee" facility
• Have features such as –
  • Variable interest
  • Principal and Interest or Interest only
  • Redraw available
  • Loan Splits
  • Loan terms up to 30 years

Introductory (Discount/Honeymoon Loans)

• Loans that offer a reduced interest rate for a fixed short term, usually around 6 or 12 months
• After this 6-12 months period the rate will often revert back to standard variable rate
• These loans have limited flexibility
• Early exit penalty fees generally apply if loan paid out in full within a set period of time
• Loan terms up to 30 years

Standard Variable Rate

• More flexible loan type offering more features for the borrower
• Offset account
• Redraw facility
• Loan Splitting
• Loan terms up to 30 years

Fixed Rate

• Interest rate is guaranteed for a selected period suitable to the borrower. This fixed time can be from 6 months - 5 years and can be longer with some lenders
• Additional payments allowed by some lenders
• Provide repayment stability
• Once fixed term finishes, loan can be re-fixed if required
• Rate will often revert back to standard variable rate applicable at the time
• Break costs may be payable if loan paid out or re-structured during the fixed rate period
• Loan terms up to 30 years

All in one loans

• Often a variable rate loan
• Is used by customer depositing their pay directly into loan
• Loan then used as day to day banking facility for borrower, with access to
• ATM facilities
• EFTPOS
• Cheque Book
• Credit and Debit Card options
• Loan terms up to 30 years

Offset Account

• Usually these loans are 100% offset against a separate savings account balance
• Unlike the “all in one” loan it separates the loan from your savings
• Generally has a Variable Interest Rate
• Balance of funds held in offset account, effectively “earn” same interest as home loan, but are used to reduce interest paid on home loan, rather than being treated as taxable income earned by the customer
• Example – if you have a $300,000 loan and you have $20,000 held as savings in your offset account, you are only charged interest on the home loan at the net figure of $280,000 ($300000 loan - $20000 savings)
• Loan terms up to 30 years

Lines Of Credit

• Provides ongoing access to equity in your property
• Loan balance can be paid down or increased as required
• Often only requires interest only repayments as a minimum
• Some lenders allow repayments to capitalize up to the loan limit without any repayment being required by borrowers
• Flexible facility providing a range of splitting options
• There is usually no set term for this type of loan, called “evergreen”

Construction Loan

• Loans generally funded in line with the building contract, as the building progresses payments are made by the lender to the builder
• Construction Loans are funded usually over a 12 month time frame
• Payments are usually made as progress payment in 3 -5 stages to the builder. (slab, frame, lock up, completion etc)
• These loans are generally interest only until after construction of the house is finished, and then revert back to Principal and Interest.
• Loan terms up to 30 years

Reverse Mortgage / Equity Release

• This loan is provided for people who wish to access their property’s equity after they have reached the age of retirement.
• Loan can be variable or fixed interest rate
• No repayment required by borrowers, interest accumulates to amount borrowed
• Loan is repaid on the borrower/borrowers death from the sale of the property
• Conditions do apply to these loans
• Independent legal advice required by borrowers
• Term of loan is flexible

Professional Package

• This loan type is generally based on loan size and/or the level of income which provide product features and discounts
• Packages usually most beneficial for loans over $250,000
• Discounts applied to these type of loans such as interest rate reductions on the loan, credit card, offset account
• There are many varying options of Professional Packages in the market place. Annual fee generally payable in lieu of ongoing fees
• Loan terms up to 30 years

Bridging Finance

• Bridging Finance is offered as a short term finance solution
• Funds are often provided for borrowers requiring finance to purchase a new property but are yet to sell existing property
• Interest capitalized on bridging component of loan
• Terms usually 6-12 months

 Family Pledge Loans

• Loans type where a family member with Equity in their property will pledge a percentage of that equity to secure the new loan and property for their relative
• Family pledged security can be removed as security for the loan once loan has been paid down to a sufficient amount. This will vary lender to lender

 No Deposit Loans

• Often these loans will be used instead of the “Family Pledge” loan type
• This allows the borrower to borrow full amount of loan plus an amount to cover costs in some instances
• Fees generally higher due to associated higher risk of the loan

Shared Equity Loan

• This is a loan structure where you borrow up to 80% of the loan required and the lender (your shared equity partner) contributes the other 20%
• When the property is sold the lender is paid out their 20% of the original loan amount, plus up to 40% of the capital gain of the property sold.
• Conditions and term apply for this type of loan.

Non-Resident / Overseas Resident Loan

• These type of loans are for overseas investors seeking to purchase property in Australia
• This includes Australians residing overseas.
• Special conditions apply to these loans
• These loans need to be reviewed and approved by the Foreign Investment Review Board (FIRB)

Conforming Loans

• Loans that meet the desired level of risk deemed to be “mainstream lending”
• Borrowers in these cases will generally have –
• Stable employment history
• Clear credit history
• Genuine saving and repayment patterns

Non – Conforming Loans

• These are the loans that fall outside the “mainstream” lending guidelines
• Often these loans suit –
• Self Employed
• Unstable employment / income history
• No / minimal saving or repayment history
• Credit impaired (defaults)

Low Doc / No Doc Loans

• Low Doc / No Doc loans are a flexible solution for self-employed people who have income and assets, but are unable to provide the required financial statements or tax returns at the time of application. No proof of income is required, however customers will need to complete an income declaration form along with the standard loan application
• ABN often required for 2 years
• Low Doc loans are available for investment and owner occupied use