Need A Home Loan?

We've Got Over 40 Lenders For You To Choose From.

With that many lenders, the task of choosing the right home loan may seem quite daunting, especially when you consider there are over 400 home loan products available.

At Money Options, we assist you to find the right loan ... not just for now but for the future.

>>What are the different types of loans??

STANDARD – PRINCIPAL and INTEREST
This is the most common form of loan and has a minimum amount that needs to paid off every month. This minimum payment includes the interest and also a portion of the principal to ensure that the loan is paid off during the term of the loan (usually 25 or 30 years). Payments are made by direct debit from a nominated bank account for the loan payment for an amount that you nominate. There are several different products that fall under this standard loan category such as:

> Standard Variable
> Fixed Rate loans – from 1 – 10 years
> No Frill’s discounted variable loans
> Honeymoon period loans, which revert to Standard variable after the honeymoon period

INTEREST ONLY
Interest only loans are – exactly as they sound. You are only required to service the monthly interest costs of the loan. This means that in 10 years time you will still owe the same amount you borrowed. These are used almost exclusively for investment purposes and the interest is normally tax deductible.
An interest only loan is typically in the form of a Line of Credit.

LINE OF CREDIT
This is a very flexible Ioan that is ordinarily in the form of Interest only, but there a couple of banks that offer it as a Reducing Line of Credit which makes it a principal and interest loan.

If they are utilised properly they can save you considerable amounts of interest on your loan. They are generally used in conjunction with a Credit Card which carries an interest free period of 55 days to expand their effectiveness.

It works as follows:

1. Your Salary and all other income is deposited directly into the Line of Credit.
2. You purchase any items possible with your Interest Free Credit card (e.g. Petrol, groceries, clothes, dining)
3. You draw any cash that you need directly from the Line of Credit with a keycard.
4. The Line of Credit pays for your Total Monthly Credit Card Bill every month on the day it’ s due (automatically) to save you any interest costs on the credit car.

The diagram to the below shows how it works and if you do run a line of credit for your mortgage, you shouldn’t need any other transaction accounts with the bank. This means that any inactive money that would normally being sitting in the bank account earning you minimal interest is saving you interest on your home loan until you access it.

The danger with these products is that if you spend more than you earn, which is easily done with these credit limits then you will get nowhere. They are ideal for strict budgeters or high-income earners who won’t abuse the credit limit that they are given.

LO-DOC-LOAN
Lo-Doc loans were only introduced a couple of years ago. Initially they were offered by a small number of lenders however in the last 12 months most major lenders have introduced the Lo-Doc loan to their list of products.

They are primarily used by self-employed people. Most self-employed people delay putting in a tax return until the final days before they are due. They also tend to show as little taxable income as possible to avoid the tax bill that comes with a higher income. Whilst this is an advantage for tax purposes it has often caused a lot of problems with lenders when applying for loans. One of the most important assessments of a loan application by a lender is the applicants’ capacity to meet the repayments.

This can be difficult for self employed people whose actual income can be substantially different from that declared and shown as taxable.
The Lo-Doc product generally allows s

elf employed applicants to apply to 80% of the value of their home and then provide a statutory declaration of an applicants income. This declaration does not need to be what is on the applicants tax return.
To be eligible to apply the self-employed applicant needs to have been in business for at least 2 years and have an ABN.

The downside of these products is the interest rate is generally around 1% per annum higher than the standard variable rate at the time. With some lenders the interest rate adjusts after a couple of years back to the standard variable rate if there are no missed payments. You are not generally able to have a fixed rate with the Lo-Doc loan.

>>What will the bank lend me?

Generally the bank will lend you up to 95% of the purchase price of the property value of whatever you are buying or refinancing.

However, you will have to pay Lender’s Mortgage Insurance for any loans that are for more than 80% of the property value. This is an average of 1.5% of the mortgage value ($2,250 on a $150,000 loan) so is worth avoiding if possible.

Each bank has their own calculation as to how much they will loan you considering your current income and debt levels but bear in mind the following:

> Overtime is assessed at 50%
> Rental Income is assessed at 80%
> Income must be able to be shown on tax returns if not PAYE employer income
> Self Employed’s need at least 2 year’s financial’s and personal tax returns
> All credit cards and AGC style accounts are assessed on the credit limit, not balancing owing
> Applicants must be able to show 6 months savings, in a bank account showing a growing balance
> Applicant’s can use the equity they have established in the current home

>>Using the Equity in your Home for Investments or other purposes