Types of Home Loans
Fixed rate loans
Fixed rate loans allow you to fix your interest rates and repayments for an agreed period of time and are typically set for 1 to 5 years. At the end of the fixed term period, the loan will typically revert to a variable loan or you may choose to roll over for another fixed term at the rates applicable at that point in time.
Variable Rate Home Loans
A Variable interest rate home loan is subject to changes in interest rates and the amount of your home loan repayment. If the interest rate rises or declines your repayment will follow.
Split home loans
A Split loan allows you to have a portion of your home loan with a fixed interest rate and the remaining portion with a variable interest rate. You have the option of selecting the percentage you would like fixed and variable, as long as the minimum fixed amount is covered, as per the individual home loan requirements.
Interest only home loans
The interest portion of your home loan is paid each month whilst the principal remains at the full balance. The Interest Only period of the home loan is available for up to 10 years and may be extended upon application. After this time the home loan will revert to a principal and interest arrangement allowing the home loan to be paid in full.
Line of Credit Home Loans
Line of credit or equity loans are loans which lenders offer you a specific credit limit that is secured against a registered mortgage over a residential property. People access these loans for a number of reasons including for renovations, investments or to purchase other properties. Usually, minimum interest repayments are necessary each month, with the principal repayments not usually required. Interest is only charged once the credit is drawn.
Low Doc home loans
Low Doc home loan is short for a low documentation home loan and is suitable for the self employed or people who are unable to provide full financial statements and other evidence of their income.
Documentation required for low doc loans will differ across lenders and can typically include:
- Borrower Self-Declaration of Income
- Accountants Certified Letter to verify personal/business solvency and trade position
- 12 months of Business Activity Statements
- 3 months of business account statements
All prospective self-employed borrowers must have a current ABN which is GST registered. The ABN must also have been registered for at a period of between 6 months and 2 years depending on the lender.
Construction home loans
A construction loan uses the funds to build a new dwelling or property and generally involves draw down payments where you receive the funds in installments after a body of construction work is complete (ie, foundations have been laid).
Bridging home loans
A Bridging loan is a type of short-term loan typically used when in the process of selling one property and purchasing the next or when waiting for the arrangement of longer term finance.