Posted by Trent Lee in Mortgage Lingo, Home Loans on August 18th, 2020
These loans allow your total borrowings to be split into different loan types. The most common is part fixed, part variable which is a good way to maintain flexibility and safety at the same time.
Posted by Trent Lee in Home Loans, Loan Types, Mortgage Lingo on August 18th, 2020
A way for older homeowners to access the wealth that’s tied up in their home, reverse mortgages allow you to borrow money using the equity in your home as security. The loan may be taken as a lump sum, an income stream, a line of credit or a combination of these options. Interest is charged like any other loan, but you usually don’t need to make repayments while you live in your home. The loan must be repaid in full if you sell your home or die or, in most cases, if you move into aged care. Typically, you are charged a higher interest rate on a reverse mortgage than for a standard home loan.
Posted by Trent Lee in Business Loans, Home Loans, Investment Loans, Mortgage Lingo on August 18th, 2020
Rate lock is an option you can choose when applying for a fixed rate home loan. It allows the borrower to lock in the interest rate for a specified time period at the prevailing market interest rate. The benefit of rate lock is to maintain the rate offered by the lender during the application process through to settlement. To obtain the benefit, the lender generally charges a fee.
Posted by Trent Lee in Home Loans, Mortgage Lingo on August 18th, 2020
An offset account is a transaction account linked to your home loan. You can deposit your salary and savings into the account and the balance is then offset against the amount owing on your home loan.
For example, if you have a home loan of $350,000 and $20,000 in your offset account, you’ll only be charged interest on a loan balance of $330,000. Your $20,000 is therefore saving interest at the home loan rate, as opposed to earning taxable interest at a generally much, much lower rate.
Posted by Trent Lee in Home Loans, Loan Types on August 18th, 2020
The interest rate is low to attract borrowers. Also known as a honeymoon rate, this rate generally lasts for a short term before reverting to a much higher variable rate loan (e.g. standard variable).
Posted by Trent Lee in Home Loans, Loan Types on August 18th, 2020
The interest rate on a fixed rate loan does not change during the fixed rate period. This means your minimum payment does not change either, so you can budget and plan with more confidence. Our recommendation is to always consider paying a rate ‘lock fee’ to ensure if the fixed rate increases between application and settlement of your loan that you get the fixed interest rate you applied for.
Posted by Trent Lee in Home Loans on August 18th, 2020
The FHOG is a national scheme funded by the States and Territories and administered under their own legislation – so eligibility and offers differ from State to State. Find out if you’re eligible at our FHOG page.
Posted by Trent Lee in Home Loans, Loan Types on August 17th, 2020
The lender has the right to change the interest rate on a variable rate home loan. As an example, this may occur if the Reserve Bank of Australia increases its interest rate and the lender chooses to pass this increase on to its borrowers. The main types of variable rate home loans are: –
Standard variable home loans, which are typically a lender’s core product, offering an array of features including offset accounts, portability, fee free redraw, and more.
Basic variable home loans, which usually have a lower interest rate than standard variable because they have less flexibility and fewer loan features.
Posted by Trent Lee in Business Loans, Home Loans, Investment Loans, Loan Types on August 17th, 2020
Repayment of the loan principal is deferred for an agreed period. During this time, the borrower only pays the interest charges which means a lower minimum payment.
IO loans are often preferred by investors because they enable the borrower to purchase a more expensive property for greater returns (e.g. 10% capital growth on $500,000 is greater than 10% on $400,000). However, using an IO loan is an aggressive strategy whereby investors risk that the property may not increase in value, or may in fact decrease.
Posted by Trent Lee in Home Loans, Mortgage Lingo on August 17th, 2020
LMI is insurance that protects the lender against losses it might incur by providing a loan to a borrower. In other words, LMI protects the lender, not you! Learn more at our LMI page.
Posted by Trent Lee in Home Loans on August 11th, 2020
Under the scheme, a one-off cash grant is available to buyers who have never purchased a home before.
The amount of the grant varies between States and Territories, so to find out what’s on offer and the State-specific conditions. Find out more
