Types of Loans

There are various types of home loans, all offering different rates and features. It is vital that you always check the terms of your loans. Our role as your mortgage specialist is to provide you with comparisons of various loan options from a panel of lenders, and assist you with choosing the right loan for your circumstances. And if you are ready to apply now, feel free to submit your information to us.

FIXED RATE LOANS

These loans are set at a fixed rate for a specified period - usually one to five years. Repayments do not rise or fall with interest fluctuations throughout the specified period. At the end of the term you can lock in another fixed rate, switch to variable or go for a split loan. These loans may have limited features and lack the flexibility of variable loans. There may be early exit fees and limited ability to make extra payments.

STANDARD VARIABLE RATE LOANS

The standard variable rate loan, like a basic or “no frills” loan, offers more flexibility than a fixed rate loan. A standard variable rate loan will often have more features than the ‘basic’ variable option so the rate may be slightly higher. The extra options (for example, a redraw facility, the option to split between fixed and variable, extra repayments and portability) should be taken into account when choosing your type of variable loan. Repayments will vary as interest rates fluctuate.

PROFESSIONAL HOME LOAN PACKAGES

These loans are offered to provide an all-in-one home loan package. They offer interest rate and fee savings on your home loan, credit card and transaction accounts and some lenders also waive the annual fees for your credit cards. An annual fee of approximately $300 is usually applicable on these loans. Professional packages can also offer amazing flexibility, with some banks willing to waive product switching fees when changing from a variable to a fixed rate or converting a principal and interest type loan to an interest only loan.

BUILDING & CONSTRUCTION LOANS

If you’re building a new home or planning major renovations to your existing home, a construction loan is generally the most appropriate funding option. The difference between a construction loan and other types of loans is that a construction loan is drawn down in stages and not paid as a lump sum. The draw downs enable the builder of a home to finance the various stages of the construction process, from the acquisition of land to the various stages of building.

DEVELOPMENT LOANS

Subject to each lender's credit policies these loans can fund land purchase and settlement costs, pre construction costs, professional fees, construction costs, loan costs, interest, marketing costs etc. Amount of the loan can be a % of the on completion value of the development. Each loan is assessed on its merits and the lender takes into consideration a multitude of factors including but not limited to time, risks, product being developed, location, competition, supply and demand, developer's experience and track record, market conditions, selling strategy, number of pre-sales, reputation of the builder etc. Interest rate charged by the lender can vary according to the above assessment. These types of loan are interest only. The loan is usually repaid from sales proceeds. The borrower will need to contribute equity towards the development.

REVERSE MORTGAGES

Reverse mortgages allow you to borrow cash against equity in your home. You usually don’t have to make regular repayments until you leave and move into care, sell your home or die. When the loan ends you, or your estate, must repay the amount owing, usually out of the proceeds of the sale of your home.

You are not required to make repayments, but over time your equity diminishes while the amount of the loan increases. Each year the fees and interest you would ordinarily pay are added to the loan balance. Over time, interest is charged on the interest (or compound interest) building up the total amount you owe.

You are generally eligible for a reverse mortgage if you are 60 years or older and own your home. You'll usually be able to borrow between 15% and 40% of the value of your home, depending on how old you are.

SELF EMPLOYED

With changing work practices, more and more people are self employed, and if you are self-employed and are looking for a loan it is not always easy.

Taxable income declared by self-employed people is often reduced as accountants look for as many tax deductions as they can achieve. Self-employed people may also have irregular income.

Another problem is the sheer volume of paperwork the self-employed person must present to meet evidence requirements. They may need to provide a copy of their passbook or all statements of savings account(s) held with other banks or financial institutions over the last three months; tax agent income statements and income tax returns; profit and loss statements certified by a registered accountant for the past two years; memorandum and articles of association and copy of trust deed; copies of personal income tax returns and their most recent financial year’s Assessment Notice.

The good news is that a number of innovative lenders have emerged in recent years and these take a simpler approach than has been taken by lenders in the past.

Take advantage of our comprehensive service. We fully explore and explain all loan options available to you.

LO DOC LOAN - SELF DECLARED INCOME

Contractors and the self-employed don't always have the same financial structure or income patterns as PAYG earners, this means you may need the flexibility and convenience of our lo doc home loans. The greatest benefit to these types of loans is they provide non-traditional income earners, with an irregular inflow of money, the opportunity to easily get into the home ownership market, or to take out a loan to upgrade. You are able to self-certify income for the loan approval application, rather than providing full financial details to the lender. This will give you faster access to your loan plus greater flexibility without needing to go through your accountant.

Debt Consolidation/Refinancing

Debt consolidation is a process where all of your debts are rolled together into a single loan.

Debt from personal loans and credit cards can be incorporated into your mortgage at a much better interest rate as home loans tend to have lower interest rates than other forms of credit. Consolidation will reduce your interest rate overall, and in this way save you money. Consolidation of your debt into your existing mortgage is most effective for larger amounts of money and should reduce the amount of your monthly payment. It also has the advantage of only having to make one payment per month.

Commercial & Business Loans

Lake Macquarie Home Loan Centre works closely with our business customers to help their business grow. Whether arranging motor vehicle or equipment finance or helping you finance your commercial or industrial property, let us do the work while you keep focused on your business.