Loan Features

Redraw
A loan with a redraw facility allows access to advance or extra payments made to the loan account. You can make extra payments to the loan, helping to reduce interest costs, whilst still having access to the funds in the future. A fee is often charged when the funds are redrawn and some lenders have minimum redraw limits.

100% Offset Accounts
A loan with a normal transactional account linked to it with any funds deposited into that account, offsetting the balance on the home loan and thereby reducing the interest charged on the mortgage. For example, if your home loan balance is $150 000.00 and you have $ 10 000.00 in your offset account, you will only be charged interest on $140 000.00.

These style loan features suit borrowers with good disposable income and frugal spending habits. All monies earned be it salary, rent or investment income can be deposited directly into the offset account to immediately reduce the interest being charged on the home loan. It is also possible to delay expense withdrawals from this account by utilising a credit card for monthly bills, thus enhancing the benefit of an offset account.

All-in-One Loans
These are normally principal and interest loans which are also used as transaction accounts. All income is paid directly into the home loan and living expenses are withdrawn from the loan, similar to a line-of-credit in operation except that the loan is reducing or amortizing. This loan is suited to borrowers who don't have 20% deposit funds and yet have fairly high disposable income.

Combination Loans
It is possible to combine different loan types from one lender. The usual scenario is to have 50% of the loan variable to allow flexible repayments with potential for redraw, the other 50% fixed in order to reduce the risk of rising or fluctuating interest rates. However, any combination is possible. Investors may wish to separate tax-deductible debt from non-tax deductible debt via the use of a combination loan. Entry costs on combination loans differ significantly, so please check with our consultants.

Interest Only Loans
Interest only loans require no principal payments. The maximum term allowed is usually 5 years with either a variable or a fixed rate option. These loans are useful for investments where the interest charged is deductible and the investor is not looking to reduce the loan balance because possibly other non-tax deductible debts are held.

Bridging Finance
These loans allow a borrower to bridge the time gap between the sale of their home and the purchase of another. Particularly useful if the purchase property has to settle prior to the sale of the existing home. Lenders qualify your maximum borrowings based on the final debt after sale, whilst taking into account interest charges that will occur on the whole debt for six to twelve months. This can be an expensive form of financing and it is imperative you talk to one of our consultants to confirm suitability.

Pre-Approved Loans
A loan that has been approved to a certain limit for a certain borrower. Drawn down of the loan being subject to the borrower locating a suitable property as security for the loan. This is an excellent start to property purchasing, allowing borrowers confidence in their bid for contract acceptance.

Interest in Advance Loans
These loans are used by investors traditionally at the end of the financial year. The product offers a discounted fixed rate loan that allows the customer to pay all of their interest for the next financial year in advance. It is a tax effective strategy of property investment.

Low Doc Loans and No Doc Loans
" Low Doc" means "low documentation" ie minimising the paperwork required to support the application for a loan.
" No Doc" means even less paperwork, ie simply complete an application form without any supporting paperwork.

This style of equity lending is fairly new to Australia but has become very popular for its simplicity. It suits both the borrower and the lender. The advantage for the borrower is that once you have acquired equity in a property, you now have an excellent chance of securing finance because the lender relies on the security of the property and not on your income.

Its simplicity makes it a winner. These loans are predominately for the self-employed but some lenders also accept PAYG income earners. The loans can be restricted by the Loan to Value Ratio (LVR), location of the security property and size of the loan. They are normally slightly more expensive than traditional loans due to the higher risk profile. The lower the LVR however, the greater the chance of reducing the interest rate charged.

Credit Impaired Loans
There are a number of lenders who specialise in providing loans to individuals who have a poor credit history, ie a history of defaults, judgments or bankruptcy. They are sometimes called lenders of "last resort". Their intention is to provide credit to individuals who would otherwise not be able to borrow, the objective being to get the borrower back on track so that in a couple of years the borrower is able to re-enter the mainstream mortgage market. The interest rates levied are dependent upon the applicant's credit rating and are obviously higher than normal bank interest rates.