My Choice Residential Loans
We understand that you may have a preferred lender you wish to deal with, or you may have a specific requirement for a loan feature that is not available in the Austral Mortgage managed suite of products.
My Choice's friendly and experienced staff can help you select the most appropriate loan to suit your needs from the many hundreds available.
We will assist you through every step of the process, from application to settlement and will stay in touch from time to time to ensure that the selected loan is always the most appropriate for your needs.
Importantly our consultants are all salaried employees and not commission driven, our recommendation are genuinely those we consider best suited to your needs.
TYPES OF RESIDENTIAL LOANS
1. Home Loan (regulated)
2. Investment Loans (unregulated)
3. Lines of credit
4. Standard Variable Loans
5. Basic Variable Loans
6. Honeymoon rate Loans
7. Fixed rate Loans
8. Split Loans
9. Offset Accounts
( 100% or partial)
10. Lo Doc Loans
11. No Doc Loans
12. Non Conforming Loans
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1. Home Loan (regulated)
These are loans for which the predominant purpose is personal use. Loans for the purchase of or refinance of an owner occupied property fall into this category. They are regulated by the UCCC (Uniform Consumer Credit Code) which provides protection for borrowers.
2. Investment Loan (unregulated)
These are loans for which the predominant purpose is investment or business use. Loans to purchase or refinance an investment property fall into this category. Borrowers may also use their owner occupied home as security to raise funds for investment in shares or property. Interest on these loans is generally tax deductible. Commonly repayments are structured as interest only.
3. Lines of Credit
These are loans in which borrowers may draw funds at any time, up to an established maximum limit. They may borrow, repay and borrow again any and all of the credit extended within the loan term. They can be used for personal or investment purposes. When used as a home loan, disciplined borrowers with a well thought out budget can reduce the term of their loan by depositing all of their income into their line of credit account, using their credit card for household expenses and clearing the credit card balance by the due date. By leaving more of their income in the line of credit account for a longer period, they reduce the daily interest charges.
4. Standard Variable Loans
These loans are priced at the banks’ advertised standard variable interest rate. Because there is no discounting of rate, the loans generally have lower ongoing fees and lower early repayment fees. They are usually fully featured with redraw facilities, options to switch to fixed rates and unrestricted ability to make additional repayments.
5. Basic Variable Loans
While the interest rate for these types of loans are usually discounted from the standard variable rate they are commonly more expensive on fees and lack many of the features of the standard variable loans and thus rendering them less flexible. They will typically attract a higher early repayment fee if paid out within the first 3 or 5 years.
6. Honeymoon Rate Loans
Essentially these are standard variable loans which offer a discounted interest rate for an initial period, usually 12 months. The interest rate will then revert to the prevailing standard variable rate. Lenders will usually have an early payout provision to recoup their discount if the loan is paid out within the first 3 years.
7. Fixed Rate Loans
For borrowers seeking security against interest rate risk, these loans will lock in the required repayment amount for the fixed rate period. Commonly the interest rate may be fixed from 1-5 years and there are now 7 and 10 year fixed rate periods offered by some lenders. However there are generally restrictions imposed on extra repayments during fixed rate periods and early repayment may result in a break cost up to the amount of interest due on the remaining fixed term. In the event of variable rates moving down, borrowers may find that they are locked into a higher fixed rate. It can be a sound strategy to fix the rate on part of the loan amount – see Split Loans.
8. Split Loans
Split loans are loans which are divided into a number of sub-accounts. The number of sub-accounts allowed may vary from lender to lender and there may be an additional cost to affect splits. Loans may be split for any number of reasons. A borrower may require different loan features, such as a variable rate and a fixed rate. They may require a principal and interest home loan and a line of credit or the split may be required for accounting purposes where part of the total borrowings are for personal purposes and part for investment purposes.
9. Offset Accounts
An offset account is linked to a mortgage account whereby the interest earned is applied to reduce (or offset) the interest on the mortgage. There are generally two types of offset accounts being 100% offset and partial offset. The interest rate on 100% offset accounts is identical with the mortgage interest rate so that 100% of the interest earned is offset against the mortgage interest. The interest rate on partial offset accounts is so that there is only a partial benefit. Offset accounts are generally not available on fixed rate loans due to the interest rate risk to the lender.
10. Lo Doc Loans
These loans cater mainly for self-employed borrowers who are unable to provide evidence of their income. Depending on the lender income may be sustained by self certification of the borrowers or in some cases their accountant. Generally a clean credit history is mandatory. The interest rate can be higher than standard rates and the loan is usually restricted to 80% of the property value. There may also be a requirement for Lenders Mortgage Insurance at cost to the borrower.
11. No Doc Loans
Also know as asset lends, borrowers can obtain a high interest rate loan with no questions asked regarding their income. Such Loans are usually restricted to no more than 70% of the property value.
12. Non Conforming Loans
Sometimes referred to as sub-prime loans, these types of loans are available for borrowers with poor credit histories, or where their loan requirement does not conform with standard credit practices eg 105% LVR Loans or loans to provide funds to commence a business.
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