Types of Loans
There are a number of different types of home loans available in the market place. What suits you best will depend on your personal circumstances and your personal choice. For more detailed information and assistance in determining what type of Home Loan suits you best, please feel free to speak with one of our consultants at RCR Finance Pty Ltd.
Principal and Interest Loan
A loan in which your monthly payments cover a portion of the principal amount borrowed plus interest charged on the amount owing.
Interest Only Loan
More commonly sought and used by property investors, this type of loan only requires you make interest only payments, with repayment of the the principal part of the debt deferred until some stage in the future. Most commonly sought is a 30 year loan term, with the first 5 years requiring interest only payments, and principal and interest payments commencing at the start of year 6. Some lenders now even offer 30 year loan terms with the first 10 years interest only.
Standard Variable
This is the most commonly known type of Home Loan which usually has a higher "benchmark" variable interest rate, and usually with all the "bells and whistles". In our experience it is not the most sought after loan product but may be suitable for some borrowers in certain circumstances.
Basic Variable
This type of loan is similar to the Standard Variable Home Loan but is usually offered by lenders at with a lower rate and has less features. It is in our experience very popular with clients and those that prefer a simple no frills low cost HomeLoan.
Fixed Rate Loan
This type of loan has an interest rate that is fixed or locked for the selected term and whereby the monthly repayments do not change when market interest rates rise or fall. This type of loan suits budget conscious borrowers or those who prefer the certainty of knowing what their monthly payments will be.
Honeymoon / Discount / Introductory Rate Home Loan
A homeloan usually offered at an attractive discounted rate for the first 12 - 15 months, and then more commonly reverting to a standard variable rate.
Line of Credit
This is a flexible and fully transactional loan with a fixed credit limit, whereby the borrower can access funds up to the approved credit limit. This type of loan often comes with ATM and Cheque Book access
All In One / Fully Transactional
An "All In One" Home Loan is essentially a fully transactional Home Loan with a reducing credit limit that allows you to deposit all your income into the loan account, and then make withdrawals up to your reducing credit limit to cover livings costs and day to day transactions. These types of loans are designed for those borrowers who:-
1/. prefer one account that does all (i.e. Home Loan / Transaction Account / Savings Account / ATM Account)
2/. prefer a Home Loan that allows all their money to remain in their loan account longer to reduce interest costs
Split Fixed & Variable
The borrower can choose a combination of variable, fixed or even a line of credit features in one loan. These are also commonly known as "split loans" or "cocktail loans".
For an obligation free finance review, or simply to discuss your options, feel free to call us speak with one our consultants CLICK HERE
