Home Loans

Making sense of the mortgage maze

With so many different lenders and home loan products in the marketplace today, making a decision on the loan that best suits your individual needs can be a challenging task. Listed below is an explanation of the various loan types that may help in your endeavour.

Basic variable rate loans are extremely popular due to their low interest rates. The trade-off with these types of products is that they are limited on features.

Standard variable rate loans are known for their flexibility and features. Partly fixing, loan splits, offset, additional repayments and redraw are usually standard with this type of product.

Fixed rate loans protect borrowers against interest rate rises for a given period of time although work against borrowers when rates fall. Fixed rate loans are popular amongst investors and home owners that require a level of security when forward planning their repayments.

Combination or blended loans allow borrowers to spilt their home loan into a partly fixed and variable portions. This provides borrowers with the flexibility of a variable rate product and added certainty of a fixed rate loan.

Equity loans or lines of credit allow borrowers to unlock the equity in their properties for any worth while purpose such as renovating, investing, motor vehicles, children's education, etc. These types of products provide a low cost option to other forms of personal lending with the flexibility of allowing interest to capitalise.

All in one loans are everyday transaction accounts where salary and expenses are paid and withdrawn from the loan. The idea here is that by depositing your salary into your loan account and only withdrawing your living expenses as required, is that the interest charges are reduced. The trap with this type of product is that it requires a high level of disciple or borrowers could end up spending more than they should. To realise the same benefit whilst minimising the overspending risks.....we recommend a variable rate product with a 100% offset facility.