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Home Loans

 

 

First Home Buyer Loans

First home buyers have become a very attractive market niche to banks and other lending institutions, especially as the property market tightens and first home buyers are entitled to $7000 First Home Owners Grant.

 

Some lenders (eg Westpac) offer first home buyers loans of up to 100% of house price.  However to take this great deal you will either need to have a guarantee from your parents or take out mortgage insurance.

 

Low Doc Loans

As indicated by the name they require less documentation than standard loans up you can pay a premium of up to 1% on your interest rate for this privilege.  Though many lenders reduce this premium each year that your met your repayments. 

 

Low Doc Loans are aimed at people that have problem with their credit history or alternatively have a problem establishing their credit history because they can’t produce all the documentation (eg group certificates) because they are self employed.

 

An extra 1% can mean you pay tens of thousands of dollars more interest over the term of a typical home loan.  Visit the home loan calculator to test this.

 

Fixed Rate and Variable Rate Loans

A fixed rate loan enables you to lock into the current interest rates for a specified term.  Alternately the interest rate in a variable rate loan fluctuations with the market.  A combined account means you can have part of your loan fixed and part variable.

 

Investment Loan

Investment loans are needed when you purchase a house you are not going to live in.  Typically the interest rate is .5 to1% above residential loans.  However you do have the benefit that the interest and any loan coast will generally be tax deductible if you are receiving rental income from the property

 

Mortgage Brokers

Mortgage brokers don’t actually lend you money, they match you up with lenders for a fee.  Typically this fee is paid by the lender.

  

Construction Loans

These are aimed at people building their own home and they are structured like a line of credit.  As the building progresses the home become more valuable and you can draw down more of you loan.

  

Home loan check

In an order to win your business many places are offering a free home loan check.  Basically this mean that they will assess what you are currently paying and compare it with what you would be paying with them.  The biggest caution here is to factor in the costs – both financial and other – of moving from lender to the next.

 

Reverse mortgage

A reverse mortgage is aimed at retirees endeavouring to access the equity in their homes.  They can borrow money against their home and not have to repay it until they die or move out. To my mind reverse mortgages are great deals for banks.  Primarily because they have a 100% secured asset and they get a premium of up to 1% on the interest rate.  It would also be wise to investigate the impact on any Centrelink payments you receive.

 

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