With the sheer number of loans available it is confusing as to which features are right for you. So, if you’re feeling a little bewildered, and possibly lost, then you’ve come to the right place. Why? Well, we’re about to look at home loan features in detail.
A basic home loan is simple. This type of loan has no features. But, in return, you get a low ongoing rate. Plus, in most cases, this loan also does not incur fees. However, the trade-off is there are no offset or redraw facilities hooked to this account. It’s a no-frills home loan.
Who suits a basic loan?
The 100% offset loan is a simple feature loan that allows you to pay off your home sooner. This loan works by linking to an account that you use every day. The amount held in this account then offsets against your home loan. For instance, let’s say you have $20,000 in your everyday offset account. This $20,000 then reduces your mortgage by this amount so that you pay less in interest.
How does this loan benefit me?
Fixed rate loans enable you to secure the interest rate on your loan for one to five years. This option gives you peace-of-mind and allows you to know what you’re paying each month. However, the trade-off is you lose loan flexibility.
How does a fixed rate loan differ to other loans?
The line of credit loan is similar to a cheque account. This type of loan enables you to draw down funds when and where you need them. Then you repay the part of the loan used monthly.
What are the terms of this loan?
An equity loan enables you to access the wealth that you’ve accumulated in a property. For instance, let’s say that you own a home valued at $1.2 million, and you owe $200,000 on the property. This scenario means you have $1 million in equity to buy an investment property, carry out home renovations or invest in shares.
Who suits this type of loan?
The Low doc loan is perfect for self-employed people who don’t have the necessary documentation that employees do. This loan is ideal for those with a strong income and assets.
Low doc loans use a self-verification method to prove income. However, the lender usually carries out a credit assessment and check to make sure the loan is affordable. Plus, this type of loan incurs higher fees.
Who can apply for a Low Doc loan?
Tags: Home Loans