Types of home loans

Standard Variable Loan

thl-newA Standard Variable Rate loan is one where the interest rate fluctuates during the term of the loan. This is the most common type of loan in Australia and tends to be the most flexible with extras such as offset and redraw facilities often available.

Basic Variable Loan

Lenders now offer basic variable loans with a discounted interest rate but with fewer features than a standard variable loan. The benefit of this loan is that because the interest rate is low, your repayments are also low. Accordingly, keep in mind that these types of loans may not offer the features and flexibility to accommodate your situation. For this reason you need to discuss your requirements with a Mortgage Adviser.

Call Action Loans on (+61) 1300 331 332 or click here to send an obligation free enquiry.

Introductory / Honeymoon Loans

These loans traditionally offer an introductory or “honeymoon” period in which the interest rate is reduced dramatically for a set period of time. At the end of this period the interest rate will revert back to the standard variable rate. With these loans it is advisable that you discuss the finer details with a Mortgage Adviser as there are certain restrictions you need to be aware of.

Fixed Rate Loan

A Fixed Rate Loan is one where the interest is “locked in” for a specified period within the term of the loan or for the whole term of the loan. These loans are ideal for borrowers who want the security of knowing their loan repayments will not increase during the term they have chosen.

Split Rate

A Split Rate Home Loan allows you to split the loan amount into two portions – one having a variable interest rate, the other having a fixed interest rate and the ratio of the split is up to the client. By splitting the loan you are reducing the exposure of interest rate increases, which will only affect the variable rate portion.

Offset Account

An Offset Account is a savings account that is linked to your mortgage loan. No interest is paid on the savings account but instead the balance of this account is deducted from your mortgage loan before the interest is calculated. Therefore less interest is charged to your mortgage account. This is a great way to reduce your interest, however there are certain drawbacks you need to be aware of. We recommend you contact Action Loans for further details.

Investment Property Loans

Action Loans are experts when it comes to property investment. We have all the right tools and solutions to meet your individual requirements. If you are purchasing for the first time or have a current property, we can show you how to start an investment portfolio using existing equity. It is not unusual for lenders to have different lending guide lines when considering an investment loan. The main differences may be serviceability and Loan to Value Ratio policies.

Self Managed Super Fund Loans (SMSF)

Superannuation legislation allows Self Managed Superannuation Funds (SMSF) to borrow and invest in residential or commercial property. Investing through SMSF may be a tax effective way for you to create wealth for your future, and diversify your super investment portfolio. Income from the SMSF, including capital gains, are taxed at concessional rate and interest may be tax deductable through SMSF. Super leveraged property investment is an ideal way for you to grow and accelerate your retirement nest egg.

If you have established a SMSF, to purchase an investment property, you need to set up a separate security trust on behalf of your SMSF. The new security trust will buy and hold the property, and provide a guarantee for the loan. The SMSF then can apply for a home loan (Loans to SMSF are limited recourse loans).

Action Loans have access to a number of lenders that are able to offer SMSF loans at competitive rates and flexible options to suit your needs. As this type of lending is specialised you need to seek advice from an Accredited Mortgage Adviser.

(The rules and regulations for setting up and borrowing through a SMSF are complex. It’s important that you seek specialist financial planning, accounting and legal advice to make sure this investment strategy and loan is right for you. The information provided on this web page is a guide only and does not constitute legal or financial advice)

Call Action Loans on (+61) 1300 331 332 or click here to send an obligation free enquiry.

Line of Credit / Home Equity

A Line of Credit Loan allows borrowers to an ongoing source of low cost finance that is secured against the accumulated equity in their home. This facility is also suitable for investors and business owners. In addition, with careful structuring and the implementation of a credit card and its interest free period, this facility can be a very effective method of paying off your home loan in record time and potentially saving thousands of dollars. As the structure of this loan is specialised, it is recommended that you discuss your requirements with an Action Loans Adviser.

Construction Loans

From our large panel of lenders, Action Loans has access to the best construction loans on the market. A construction loan is available to clients wishing to build a new home through a registered builder. When applying for a construction loan, lenders often require significant documentation that can seem overwhelming. Your Action Loans Adviser can assist you through this process and ensure a smooth and stress free result. We can even organize the first home buyers grant if applicable.

Low Doc Loans

Low doc loans are predominantly for the self employed who are unable to provide income details. They are called “low doc loans” because the applicant is able to supply the lender with minimal income documentation. The interest rates are normally the same as standard rates however in some cases they may be higher. As Low Doc Loans can be complex it’s vital that you consult an Action Loans Adviser for further details.

Click here for more information on Low Doc Loans.

Deposit Bonds

A Deposit Bond is a guarantee that substitutes the cash deposit between signing contracts and settlements. A bond can be issued for all or part of the initial deposit required on the property and can be up to 10% of the property purchase price. This is great for buyers who do not wish to commit a full cash deposit or simply don’t have the funds upfront. There are conditions that you need to be aware of, so please talk to an Action Loans Adviser for further details.