|
|
|
|
| |
Let your Harbour Finance do the hard work of finding loans that best
suit your situation and feel secure in the knowledge that you are
being offered a very wide range of products to choose from. Select
from the following type of loaning options;
|
|
|
|
| Standard
Variable |
| |
|
This
is the most common loan in
Australia. As the name
implies the interest rate may vary either up or down over
the period of the loan.They also tend to be the most
flexible type of home loans with extras such as redraw,
offset and the ability to make additional repayments readily
available. |
|
|
|
Benefits
 |
|
If interest rates fall so should your
repayments.
Probably the most flexible of all home loans allowing you to
redraw funds, make additional repayments and offset credit
balances against your loan balance.
These extras may reduce the amount of interest you have to
pay meaning you may be able to repay your loan faster |
|
|
|
Considerations
|
|
If
interest rates rise so will your loan repayments.
Make sure you require the added benefits as lower interest
rates are available if you don't need them.
Try our Calculator to see what difference it may make to
you.
back to
top |
|
|
|
|
Basic
Variable |
| |
|
This
is a no frills version of the Standard Variable Rate Loan.
Basically the extras offered under the Standard Variable
Rate Loan are removed thereby allowing the lender to reduce
the interest rate charged. The less features the cheaper the
rate! It is ideally suited to customers who do not have any
surplus cash flow. |
|
|
|
Benefits
|
|
If you are not going to use the features
of the Standard Variable why pay for them? |
|
|
|
Considerations |
|
If interest rates rise so will your loan
repayments |
| |
|
back to top
|
|
|
|
|
Introductory
(honeymoon) |
| |
|
These
are commonly promoted by lenders to attract interest rate
sensitive customers. They generally offer a guaranteed low
interest rate for a set period of time after which the
interest rate will revert to the Standard Variable Rate. |
|
|
|
Benefits
|
|
|
|
As
the interest rate is lower for the introductory period,
so are your initial repayments. |
|
|
|
|
|
|
|
Considerations |
|
|
|
Your repayments will most likely increase once the
introductory period is over. |
|
|
You need to assess your overall position as introductory
loans can often end up more expensive in the long run
than other products.
back to
top |
|
|
|
|
|
|
Fixed
Rate |
| |
|
As the
name implies you fix in a rate on your loan which cannot
change for the agreed term, usually 1 to 10 years. These
loans are ideal for customers who want the security of
knowing that their loan repayments will not increase during
the term they have chosen. They are especially popular with
investors seeking to fix in the cost of their investment.
Fixed
rate loan repayments can either be Principal and Interest or
Interest Only. Interest Only loans tend to be used by
investors where the ability to calculate future interest can
assist with taxation planning. |
|
|
|
Benefits
|
|
|
|
Allows you to fix in the cost of maintaining your loan.
In other words you know the cost of your repayments for
the life of the loan. |
|
|
If
the variable interest rate increases you can smile
because yours won't! |
|
|
|
|
|
|
|
Considerations |
|
|
|
Fixed loans tend not to be as flexible as variable rate
loans. For instance you may not be able to make
additional payments, redraw or offset credit balances. |
|
|
If
the variable interest rate falls yours won't. |
|
|
You may be up for early repayment penalties if you wish
to repay, refinance or switch to a variable rate before
maturity. |
|
|
|
|
|
Idea
|
|
|
|
If
you are concerned about this why not consider a split
loan facility where you maintain a portion on variable
and fix in the rest. |
|
|
|
back to
top |
|
|
|
Interest
in Advance Loans |
| |
|
Traditionally taken out at the end of the financial year,
these are fixed rate loans that allow the customer to pay
all their interest for the next financial year in advance.
This allows them to claim any available tax deduction in the
current financial year. As the tax deduction is the only
reason for paying interest in advance they are therefore
provided only on investment loans. |
|
|
|
Benefits
|
|
|
|
Tax effective |
|
|
Discount provided on interest rate because of
pre-payment |
|
|
|
|
|
|
|
Considerations |
|
|
|
Talk to your financial planner to see if this is an
effective strategy for you |
|
|
|
back to top |
|
| |
| Low
Doc Loans |
| |
|
These
loans are predominantly for the self employed who are unable
to substantiate their income for traditional loan products.
They are called “low docs” because the applicant is only
required to supply the lender with a declaration (which come
in different forms) that they can afford the repayments.
These loans are often restricted by LVR and the maximum loan
amount. They are usually slightly more expensive than
traditional loans due to the higher risk profile.
back to top |
|
|
|
|
|
|
Line
of Credit |
| |
|
A Line
of Credit is an ongoing source of low cost finance that is
secured against the equity that you have in your home. It is
similar to an overdraft facility in that funds can be
withdrawn up to a certain limit with no principal repayment
deadlines.
Lines
of credit are generally used for investment purposes; i.e.
as equity for an additional property investment or for
investment in shares or managed funds. |
|
|
|
Benefits
|
|
|
|
You can use the funds as and when they are required and
only pay interest on the outstanding balance. |
|
|
|
|
|
|
|
Considerations |
|
|
|
You need to be budget conscious to operate this type of
loan. If you are unable to budget or have a tendency to
spend any money available then this may not be the loan
for you.
back to top |
|
|
|
|
|
|
|
|
Bridging
(home to home) |
| |
|
If you
have enough equity in your current home, we can arrange for
a Bridging Loan. These loans enable you to buy your new home
now and sell your current home later. The good news is these
loans can be arranged at Standard Variable rates.
back to top |
|
|
|
|
Split
Rate |
| |
|
These
loans work by enabling you to split the loan two ways; i.e.
a portion is locked into a fixed rate for a fixed term and
the balance is charged at the variable rate. It is an
excellent way of reducing the effects of interest rate
movements; if the variable rate falls, you benefit from the
fall on your variable rate portion; if they increase, you
benefit from your Fixed Rate portion which will not
increase. |
|
|
|
Benefits
|
|
|
|
Creates a sense of interest rate stability. |
|
|
The variable portion can give you flexibility such as
redraw, offset and the ability to make extra repayments. |
|
|
|
|
|
|
|
Considerations |
|
|
|
If
interest rates rise your variable rate and therefore
your payments will still increase. |
|
|
If
interest rates fall you will still be paying interest on
your fixed rate loan at he original rate. |
|
|
|
back to
top |
|
|
|
|
All
in One / Offset |
| |
|
An
All-in-One Loan allows you to repay extra amounts off your
loan and "redraw" them when you really need them. The
benefit is that if you make additional repayments above the
minimum required your loan balance will fall and so will
your interest payments. The Loan operates like a normal
cheque account with salaries etc being credited to the
account and funds withdrawn via cheque book, ATM or Eftpos
as per usual.
Some
lenders do not have All-in-One accounts but instead operate
Offset accounts. This is a stand-alone credit account that
acts as your day-to-day transaction account. The outstanding
balance on the account is "offset" against your mortgage and
you only pay interest on the net amount. Most Offset
accounts provide a 100% offset but you should confirm this
before entering into any deal. |
|
|
|
Benefits
|
|
|
|
Best value for money as credit balances (or deposits)
will reduce the balance on which you pay interest. Whist
repayments won't decrease you will be paying your loan
off sooner. |
|
|
Operates like a normal bank transaction account. |
|
|
|
|
|
|
|
Considerations |
|
|
|
Interest rates may be slightly higher due to the offset
feature. Ensure the offset will be of greater benefit to
you than the higher interest cost. |
|
|
Check the terms under which the Offset works - i.e. do
you have to keep a minimum balance in the account. |
|
|
|
back to
top |
|
|
|
|
|
|
Professional
Packages |
| |
|
Many
lenders provide interest rate and /or fee discounts for
customers they describe as “professional”. Some lenders use
income as the determinant whilst others use the amount the
client is borrowing. Whatever the case these products can
provide customers with up to 0.7% off the standard rates as
well as providing other benefits to do with credit cards or
insurance etc.
back to
top |
|
|
|
|
Credit
Impaired |
| |
|
There are a number of lenders who specialise
in providing loans to individuals who have a history of
defaults or judgements. They are sometimes called lenders of
“last resort”. They are also called “dry cleaners” as their
intention is to provide credit to individuals who would
otherwise not be able to borrow, get them back on track, so
that in a couple of years they are able to re-enter the
mainstream mortgage market. The interest rates charged are
significantly higher due to the increased risk with the
actual rate dependent upon the applicant’s credit rating.
back to
top |
|
