Choosing the product that suits YOU!!!!
The Standard Variable Home Loan:
This home loan offers you complete repayment flexibility. It comes with a savings account and sometimes an offset savings account is offered.
See Below for explaination of Offset.
Interest is calculated on a daily basis and added to your loan at the end of every month. You can choose to repay principal and interest, or interest only. In repaying principal and interest, you are reducing your overall loan debt. However, if you choose to repay interest only, you do not reduce your loan amount. You can pay extra repayments at any time, generally with no penalty and for a fee, withdraw those funds when you require them. There can also be an Intro rate or Honey Moon Rate Loan if the bank you select has that product available.
See below for more details. REMEMBER, the choice of loan type is entirely yours.
Fixed Interest Rate Home Loans:
A fixed interest rate home loan, is a fixed amount of interest on a fixed loan amount with a fixed repayment. If you choose to make extra repayments on a fixed loan you are generally limited to an amount capped by the lender. At the end of the fixed rate term you normally swing to the variable rate, however you may be given the option to again take a fixed interest rate and sometimes at no cost.
Many fixed loans can have extra repayments made at any time during the fixed period. Again there are limits to these and you must check with your lender as there are penalties attached for breach of contract, which are quite costly. You should also be aware that if you pay out this type of loan before its term is complete, you will pay a penalty "break fee" which can be up to 3 months interest on the original amount of the loan not the loan balance. This penalty can vary from bank to bank. Interest is calculated on a daily basis and added to the loan at the end of every month. There can also be an Intro Rate or Honey Moon Rate loan if the bank you select has that product available.
See below for more details. Check with your Able Home Loan expert.
Split Rate Home Loans:
This type of loan allows you to have the best of both worlds. You can have a portion Fixed and a portion Variable.
Say your total borrowings are $240,000. You are able to have $40,000 Variable Interest, so you can repay this part of your loan faster by making extra payments and have $200,000 Fixed Interest so that you know exactly how much you are going to pay and for what period. This allows you to set your budget in advance. Interest on this type of loan is also charged on a daily rate and added to your loan at the end of each month. This type of loan almost always has a separate savings account, which can also have an interest offset savings facility.
See Offset Below.
Line of Credit:
This type of loan is generally a Cheque Book/Card account in which you are able to access the equity in your home for any purpose. You can also have your salary directly deposited into this type of account and draw funds up to a preset credit limit. In this type of loan you are charged interest on a daily rate. The interest payable is calculated only on the lenders funds that you have accessed.
EXAMPLE: You have a $100,000 line of credit but have used only $20,000 of this limit. Through direct deposit you have lodged your salary of $5,000 into this account. You will only pay interest on the $15,000 used. This type of loan can save you money, however you must receive independent financial advice to determine if this product suits your needs.
Honey Moon / Intro Rate:
These type of loan have the most attractive interest rates, however you must be careful!
1stly the rate that is issued is only for a set length of time, usually a relatively short period. (6 to 12 months) After the Intro term has expired, the loan reverts back to the normal standard rate applicable at that time. If you choose to not enter your lenders variable or fixed rate loan at this time and choose to shop around for another lender, a substantial penalty will apply. This is called a Deferred Establishment Fee. Be aware that if you have a Variable Intro Rate you are still subject to fluctuations in the interest market set by the Reserve Bank. 2ndly If you have a fixed Intro Rate it may well be that by the time it comes to draw your loan down, the interest rate may of changed. You will therefore be liable to pay the higher rate. However, you may wish to pay a Rate Lock Fee. This means that once the bank has approved your loan, they will guarantee that interest rate and loan approval for a 3-month period. Should your settlement go longer you may find that you will have to pay the new rate not the rate you originally agreed upon. Make sure you check!!!
Basic Home Loan:
This type of loan is a no frills home loan. This loan has NO offset available with it, however it has a redraw facility. This loan normally has quite an attractive variable interest rate, which has been discounted from the standard variable rate. This rate is generally approximately 0.5% less than the normal standard rate. This can vary from bank to bank. This type of loan can suit a number of different life styles. See your Able Home loan consultant for more information.
The benefits are the same as if you had paid the savings against your home loan, but without the money ever having left your account. With a 100% interest offset facility, the amount of interest on your loan is calculated on the difference between the loan balance and your savings account balance. This facility is only available on variable interest rate housing loans and is not available through all lenders. If considering this product it is recommended that you seek independent financial advice to determine product suitability.
All In One:
These accounts are for those who are very disciplined Credit Card users. This account is a combination of a Line of Credit and an Offset Account. Again the deposit of all the monthly income goes direct to this loan. Meanwhile, you leave all of those funds in this account for the month except for a small amount of cash that is required for the payment of your incidental expenses. (Bus, train or that all important cup of coffee.) By the careful use of your credit card for all other purchases during the month, ( fuel, electricity, phone, groceries etc) and by the paying the FULL credit card balance out before the due date, you have effectively used the banks money for 1 month at no cost. You have now maximised your wages by using it to reduce the loan balance and the interest payable. For further information on this product or its suitability for you personal circumstances you are advised to seek independant financial advice.
This website contains a summary of financial products available and is intended as a guide only. Information is correct at the time of printing and individual lenders products and policies are subject to change without notice. For detailed information please contact Able Home Loans.