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LOAN TYPES

LOAN PRODUCT

WHEN BEST TO USE

Discount Variable / Honeymoon

These products offer the borrower a discounted rate for the first 6 to 12 months of the loan. The interest rate then reverts to the standard variable rate after the introductory (honeymoon) period..

These products are appropriate to use when the loan is only required for the short term.  A lender may charge an early repayment fee so be careful as this will increase the overall cost of the loan.

Basic Variable

A basic variable product is what’s called a ‘no frills’ loan.  There are very few features.  Most basic variable products on offer today include a redraw but at a cost.

Mainly suited to investors.  Best used as a ‘set and forget’ arrangement.  Most investors set up an interest only loan and arrange for the interest only repayments to be debited automatically from their transaction account.  The loan account is not designed to transact frequently within it.

Professional Packages

Professional packages normally bundle a number of discounted products (for example a loan, a credit card and a transaction account – also known as an offset account). Professional packages provide interest rate discounts which remain for the life of the loan.

Professional packages normally suit people borrowing over $250,000 and/or borrowers with multiple loan accounts. Whilst an annual fee typically exists, the interest rate discounts are very appealing and normally more than offset the annual fee.

Line of Credit

Line of Credit products are essentially a transaction account and a loan account rolled into one. They are the most flexible product on the market. They do not have a loan term and as such the minimum repayment to the lender is the interest only, charged to the Line of Credit account monthly.

A Line of Credit is normally more expensive than a standard term loan. There are normally cheaper alternatives which provide similar flexibility (i.e. 15 year Interest Only term loans are available nowadays).  We recommend the use of a Line of Credit when regular transactions are required (e.g. share trading).

Fixed Rate Mortgage

The interest rate is fixed for a pre-determined period (usually between 1 to 7 years).  Fixed rate loans are less flexible than variable loans as they limit the amount of extra repayments you can make and you generally cannot access your extra repayments until the fixed rate period expires.  Penalties usually apply if you break the mortgage during the fixed period.

These products suit borrowers that are concerned about interest rate fluctuations.  There are many advantages and disadvantages of fixing your loan.  Nowadays you are able to split your loan into fixed and variable, and enjoy the best of both.

Offset accounts

A 100% offset account is a savings account linked to a loan account. No interest is paid to the offset account but instead the balance of your offset account is deducted from your loan account before the interest on your loan is calculated. Therefore less interest is charged to your loan.

Offset accounts are useful for owner occupiers (home loans) because they allow the borrower to save on their overall cost.  Offsets accounts are also a perfect strategy for investors as they can be useful to preserve future tax benefits.

Low-doc loans

Low-doc loans provide flexible financing solutions for self-employed people.  Low-docs are designed for people who have income and assets, but are unable to provide the usual verification documentation such as financial statements and in some cases, tax returns.

If a self-employed person has a mountain of company or trust structures and finds it all too hard to explain the mapping of such structures and how the money filters through, then a simple BAS statement or verification from the Accountant will suffice.  Or if a self-employed person has not lodged a tax return for whatever reason, and the right opportunity has presented itself to purchase a property, then a low-doc loan may be the only answer.

CALCULATORS

CALCULATORS

The calculators below will help you assess your borrowing power, potential loan repayments, interest savings, purchase scenarios, as well as savings and taxation planning.  Use these as a guide only as specialist advice is always recommended.

These calculators are designed to provide an estimate only.  Whilst every effort is made to ensure accuracy, users are directed to seek professional advice before relying on any information provided by these calculators to determine if this information applies to their own personal circumstances. No responsibility or liability is assumed or accepted by Mario Borg Strategic Finance to any person for any loss or damage (whether caused by negligence or not) arising from the use of the information or results obtained from these calculators.

Please contact Mario Borg Strategic Finance for assistance.

APPLICATION CHECKLIST

APPLICATION CHECKLIST

In order to make the loan process an easy one, there is certain information that you need to get ready before applying.

You will be asked for:

  • Details of your income. You will need to provide copies of your payslips and group certificates
  • If you are self-employed you will be required to provide copies of the past two years’ financials and tax returns for business and personal
  • Details of any investment income such as rental statements for any investment properties that you currently own
  • Evidence of your savings, such as bank statements, term deposits, share portfolio, etc.
  • If you have purchased a property you will need to provide details of the property along with specific pages of the contract of sale
  • If you have purchased an investment property, you will also need to provide confirmation of the rental
  • If you want to refinance you will be required to provide copies of the last 6 months loan statements of your existing mortgage(s)
  • Copies of all recent rates notice for all properties owned
  • Details of your current assets and liabilities
  • You will also be asked to provide sufficient identification to satisfy Government and lender identification requirements

FIRST HOME OWNERS GRANT

FIRST HOME OWNERS GRANT

What is FHOG and am I eligible for it?

The First Home Owner Grant scheme offsets the effect of the GST on home ownership by providing a grant to first homeowners.

It is a one-off payment made by the Federal Government, and, in some States and Territories, additional payments may be available to assist eligible first home owners with purchase or construction costs.

To see what applies in your State or Territory, click here.

 

Alternatively, you can contact us to find out if you are eligible today