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Basic Home Loan
A Basic Home Loan is a ‘no frills home loan’, also known as a ‘Basic Variable Rate Home Loan’. It’s simple. You will get a low interest rate home loan with ‘no frills’ features. Having a basic home loan variable interest rate means:
You can purchase your first home sooner, as you will be required to pay less interest and fewer fees. interest rates of half to one per cent lower than the standard variable rate, with different lenders offering a range of products.
- Choice of repayments – Can be monthly, fortnightly or weekly
- Low interest rate – The interest rate is lower than a standard variable rate loans.
- If you are on a tight budget, it can make your monthly repayment schedule easier to manage.
- Extra repayments are allowed – most lenders allow extra repayments without incurring a penalty.
- Variable interest rate – The interest rate fluctuates with market conditions.
- Limited features – Certain features may not be available, or be as flexible as a standard variable rate home loan.
Intro Rate Home Loan
An Introductory Rate Home Loan (also known as an ‘Intro Rate Home Loan’) is a much lower interest rate loan for a set period of time, usually between one and three years, depending on the lender.
- Choice of repayments – Can be monthly, fortnightly or weekly
- Low interest rate – The interest rate is always lower than a standard variable rate loans.
- If you are on a tight budget, it can make your monthly repayment schedule easier to manage
- Lower payment for the first period of the loan.
- Once the introductory period expires the loan will automatically “revert” to a higher interest rate, usually the standard variable rate.
- Switching fees to a different loan can be much higher.
- Limited features, as this is meant to be a ‘low frills’ loan product, and is priced accordingly.
Split Rate Home Loans
With Split Rate Home Loans you can have exactly that. A Split Rate Home Loan is one where you can choose to have a portion of the loan with a fixed interest rate, and another portion with a variable interest rate.
- Fixing portion of your loan can protect you against future interest rate rises.
- Leaving part of your loan at a variable interest rate allows you to save money if interest rates fall.
- You can have a fully featured home loan by combining different home loan products.
- A Split Rate loan, because of the many variables available, can have a complex fee structure.
- Limited amount of extra repayments might apply to the fixed portion of the loan
- Flexibility to change lenders is reduced due to exit fees attached to the fixed component.
Package Home Loans
Packaged Home Loans, also known as a Professional Package Home Loans, combines your home loan with your regular bank accounts and credit cards for an annual fee.
These packages are now available to a wide variety of borrowers with sufficient income or aggregate loan size.
- Professional Package Loans generally offer discounts of between one and two percent under the usual interest rate.
- Professional Packages also offers a range of other discounts on accounts such as credit cards, transaction, margin loans and insurance.
- Fully featured account e.g. redraw, split loans, etc
- Interest rate discounts on the standard variable rate
- Other benefits such as fee free transaction accounts and discounts on insurance products
- No establishment fees and no ongoing monthly fees on your loans (This feature is not available from all lenders)
- An annual fee applies to this product
- I might not require all the extra features
Whether you want to get a better Home Loan deal, to consolidate your debts, or simply because of changed circumstances, refinancing your Home Loan can be very advantageous to if done correctly.
- You can save on interest payments and manage your debt more easily
- Monthly payments can be reduced, freeing up money for ‘other things’ Compare here
- You can reduce the fees you pay on an annual basis
- Changing from a fixed rate home loan to a variable rate home loan can enable you to pay off your loan sooner
- Changing from a standard variable home loan to a fixed rate home loan can give you greater control over your payments
- There may be significant exit fees on your current loan. Be sure to take all exit fees and application fees into account – sometimes the future savings are not worth the immediate cost
- A new valuation of your home may need to be done. If your new valuation is lower than expected, you will be liable for Lenders Mortgage Insurance
- When the loan to value ratio is more than 80%, Lenders Mortgage Insurance is payable
- There will also be government fees associated with your new mortgage
First Home Buyers
Buying your first home is about moving forward, embracing life. It’s also about goals, dreams, commitment and the rewards that come from sticking to a plan.
No more rent, freedom to renovate or decorate the way you want, and the ability to provide security for you and your family in the future. To help you get started consider these seven factors when applying for a home loan:
The first step for First Home Buyers is to work out how much you can borrow. You need to look at your income and all your current living expenses to work out how much you can put towards your home loan. Whilst all lenders do not lend the same, as a guide your home loan repayment should not exceed 30% of your pre tax income.
The total amount of your deposit will affect the types of loans and lenders that are available to you but with a little help from your specialist home loan adviser at Channel Direct Home Loans, securing your first home or investment loan at a competitive interest rate may be easier than you think.
Some lenders will allow you to borrow between 90% and 95% of the property value at their regular interest rate terms, provided you have the required genuine savings and can prove you can service the loan. Some may also allow you to capitalise your Lenders Mortgage Insurance costs. With the most common low deposit home loan, this effectively takes your borrowings to around 92% of the property value. These loans are suitable for any type of borrowing but particularly effective for first home buyers. Please note that one impact of the Global Financial Crises is that true 100% loans that cover the entire purchase cost of the property are unavailable in the current economic climate.
Most lenders have introduced the requirement for borrowers to put a minimum of 5% of genuine savings towards their deposit. The “genuine savings” requirement is explained as 3 – 6 months saved in a consistent and regular pattern.
LMI is usually required when the Loan to Value Ratio (LVR) (the value of the loan amount opposed to the value of the property) is greater than 80%. LMI protects the lender from any losses that may occur as a result of a default by the borrower (i.e. the borrower forgoes repayments). LMI only covers the lender if you default, not you. Dependent on the lender and the risk, LMI can cost up to 3% (and more for larger amounts) of the amount you are borrowing. Up to 95% loans (or 5% deposit), the amount would typically be at the highest. As you get closer to 80% home loans (or 20% deposit), the cost usually discounts substantially.
To completely avoid paying LMI, you will need to pay a 20% deposit. Your deposit may be provided from a combination of genuine savings, gift or by way of a “family pledge” or Limited Guarantor Loan.
Variable Rate Home Loans
Variable Rate Home Loans are loan where the interest payable on the loan can be changed by the lender.
These changes in the interest rate are driven by market fluctuations, such as:
- Changes to the Reserve Bank Cash Rate,
- The economic climate
- The risk factor to the lender.
- Competition within the markets
Fixed Rate Home Loans
A Fixed Rate Home Loans offers you steady repayments each month. If you are on a fixed income, it’s nice to know that your repayments won’t be changing. This makes household budgeting easier. If you don’t like surprises and you are working on a budget, Fixed Rate Home Loans are most suitable for you.
Moreover, the interest rate on a fix loan is often a bit lower than the interest rate on a variable home loan, so you can save more money.
- Your repayments will not change during the selected fixed term, making it easier to budget. You have the peace of mind knowing your repayments won’t increase.
- If you fix your rate at the right time, you can pay less interest than a variable rate loan. Predicting when the interest rate cycle has bottomed, however, can be difficult, even for economists.
- If interest rates fall you may pay more for your loan than borrowers on variable rates.
- Capped extra repayments – it might cost money to pay your loan off faster.
- If you pay off your home loan before the end of the term, there may be extra costs.
- Less Flexibility – extra repayments are limited and redraw is usually not available.
SMSF Property Borrowing
SMSF Property Investment was once the domain of wealthy baby boomers, but now younger Australians on average incomes have begun using self-managed superannuation funds (SMSFs) to invest in property. Some have realised that their current retirement strategies may not meet their lifestyle preferences when they reach retirement.
You can only buy property through your SMSF if you comply with the rules. Channel Direct Home Loans are MFAA Approved Credit Advisers for SMSF Lending
- Must meet the ‘sole purpose test’ of solely providing retirement benefits to fund members
- Must not be acquired from a related party of a member
- Must not be lived in by a fund member or any fund members’ related parties
- Must not be rented by a fund member or any fund members’ related parties
- Purchase residential investment property – SMSFs can use borrowed monies to assist in purchasing a residential investment property within the super fund. The property must be held in trust for the SMSF until the loan is repaid.
- Security of a limited recourse loan – rights of recovery against the SMSF are limited to the secured property. All other assets held in the SMSF are protected.
- Potential gearing benefits – it may be possible to claim the interest paid on the loan and expenses as deductions against rental income for tax purposes.
- Rental income can be used to demonstrate serviceability – rental income from the investment property can be used to repay the loan.
- Integrates easily with existing SMSFs – the loan structure is designed to easily integrate with most SMSFs.
- Repair and maintenance (OK) vs Improvement (NOT OK)
- Retain asset identity (OK) vs Becomes different asset (NOT OK)
- Single asset (OK) vs Multiple assets (NOT OK)
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Is it time to update that old car to a New Car?
Do You need buy a new second Car?
Is it time to upgrade that work vehicle and buy a new vehicle?
Need to buy a new family Car?
If you are considering this contact us to discuss you options
Vehicle & Equipment Loans
In addition to sourcing quality home loan product solutions Channel Direct Home Loans can assist you in accessing finance for Vehicle & Equipment Loans.
Channel Direct has a team of professionals who specialise in Vehicle Loans. These specialists can arrange any type of lease or equipment anywhere in Australia. We can help you in financing your new or used car, van, motorcycle, or caravan. We have different financing and leasing options to suit your needs.
When you choose to avail Vehicle Loans from Channel Direct, you can take advantage of the following:
- Competitive interest rates
- Flexible repayment options
- Fast approvals
- Excellent customer service
Reverse Mortgages or Seniors Finance are loans which allow you to borrow an amount of cash against the agreed value of your home. You do not need to make any repayments during the life of the loan.
A normal Bank loan, or forward mortgage, is based on your income and your ability to make repayments.
In the case of a reverse mortgage, it is the agreed value of your home that acts as the security for the amount you borrow. Interest on this loan is accrued monthly throughout the length of your loan.
No repayments are needed while you live in your home and you can live there for as long as you choose.
The loan must be repaid when you either permanently move out of the home,move into ongoing aged care or upon death.
As with all reverse mortgages, the amount you can borrow is based on two key factors:
- the agreed value of the property, based on an independent valuation
- the age of the youngest borrower.
- No restrictions on what you use the money for. Money for Living.
- No regular repayments required.
- You retain ownership of your property.
- Compounding interest has a significant impact over the long term.
- Your Beneficiaries’ inheritance may be affected.
Call Channel Direct Home Loans Today for a chat about reverse mortgages or anyother home loan products you may be interested in and one of our accredited consultants will explain the differences and help you choose the loan that most suits your needs.
There are several providers of Reverse Mortgages that include major lenders andnon Bank Lenders.
We only recommend reverse mortgage products by lenders who are members of SEQUAL (Senior Australians Equity Release). SEQUAL is the self-regulatory body of the reverse mortgage industry, dedicated to the protection of borrowers and the promotion of responsible equity release lending options.
Home Equity Loans
Aside from fixed rate loans, home equity loans are also available in lines of credit, which is also available for 5 to 20 years terms.
This home loan product is known by a number of names – it’s also known as a Revolving Line of Credit. This type of loan has become popular due to its flexibility and features.
- A solution for borrowers who are on track with their own debt reduction program.
- Flexible payment options – Usually interest only, and you only pay for what you use.
- You can choose not to pay any repayments for a period of time, and let your interest capitalise.When you reach your 100%, interest payments are required.
- The interest that you have to pay on home equity loans is usually tax deductible.
- You can reimburse home equity loans over the length of 15 to 30 years, which is far longer compared to other types of consumer loans.
- Home equity loans also have lower interest rates compared to other types of home loans.
- You can use the cash in any way you want. There is no need to show the lender how you plan to spend the loan proceeds.
- Lump sum repayments are allowed at any time.
- Better Accessibility – Money is easily accessed by cheque or ATM card linked to the loan.
- Works well in combination with a traditional home loan.
Lo Doc Loans
These loans are designed for self employed people. A Lo Doc Home Loan means less paperwork than a regular home loan.
Lo Doc loans (including Non-Conforming Loans) have been designed especially to help borrowers who do not meet “standard” lending criteria. For example, you do not have up to date financial documents (i.e. tax returns) that would support your loan application.
If you are considering getting Lo doc Loans, you need to secure three important requirements:
- Self-certified Income
- Confirmation of Self-Employment Status (if applicable) – Usually with a registered ABN or a letter from an accountant
- Clean credit history and good repayment record for current or past loans