Home Loan are different to personal loans whereby the Bank will want some sort of security against the loan. This security is normally the property you are buying, however can be other forms of security in some instances.
A home loan is also taken over 25 or 30 years (depending on circumstances), so it is important to get the right Home Loan that suits your individual circumstances.
Home Loans can be used for many personal purposes including buying property, buying a car, renovating, paying for a holiday to name a few.
Investment Home Loans are set up the same as a Home Loan, however the primary purpose of the loan is for property investment purposes. Interest rates can be slightly higher on an investment home loan therefore it is important to ensure you are getting the right loan for your circumstances.
Having a great accountant may also assist you with advice when looking at buying an investment property.
Vehicle & Business Finance
Running a small business can have its challenge’s including trying to find time to look for a great deal on Vehicle and Business Finance. Aussie Dream Home Loans can do the ‘shopping’ for you, so that you can do what you do best…run your business.
With a large panel of Lenders, we will find a solution that best fits your needs.
Building & Construction
A Building or Construction loan can be used for the following purposes:
- Building a new property
- Home Extensions
- Raising a property
- Other substantial changes to a property
This type of loan is different to a standard loan as it is drawn down in increments, called ‘progress payments’, depending on the purpose above.
The valuation of the property is based on the ‘end’ product and the maximum loan amount is based on that valuation.
A construction loan will usually be interest-only over the first 12 months and then revert to a standard principal and interest loan.
How do progress payments work?
Once a construction loan has been approved and the construction of the property is underway, lenders will make progress payments throughout the stages of construction. For the new properties being built the payments will be made at completion of five stages (1) Slab down/base, (2) Frame stage, (3) Lockup, (4) Fitout/fixing and (5) Completion.
For other purposes the payments will be determined by the Lender.
As the loan is being progressively drawn down, interest only repayments will only be charged/calculated on the funds used. For example, if by the third progressive payment only $150,000 has been drawn down on a $300,000 loan, interest would only be charged on $150,000.
Can you use a ′standard′ home loan instead?
Yes, you can – provided you have sufficient equity to be able to borrow the amount that you need to build/renovate without using the end product for the valuation. You could apply for a standard home loan, fully drawn down from day 1.
The advantage of this is that you are in control of the progress payments and any incidentals that may happen along the way. This is a particular advantage for owner-builders or those who are doing some portion of the construction themselves.
A potential disadvantage is that by fully drawing the home loan from day 1, you are also paying interest on the loan from day 1. This can be mitigated by placing any not-yet-spent construction money in a 100% offset account against your loan.
Building a home is not without its headaches – financial and otherwise. But getting the right loan structure in place will help to reduce the severity.
Standard Variable Loans
Standard Variable Loans (SVR) have an interest rate that can fluctuate with the market.
It is up to the individual Banks to decide whether to increase, or decrease, interest rates at their discretion (they usually follow the cash rate set by the Reserve Bank of Australia each month).
If the interest rate increases, your bank will normally notify you to increase your minimum repayments to ensure that the loan is repaid within the contracted term.
Most Banks have different standard variable rates which is why it is important to see your Broker to get the best rate available.
In most cases you can split your loan so that you have some on a standard variable rate and some on a fixed rate (see: fixed rate home loans).
Fixed Rate Loans
A fixed rate is applied to a loan upon request (either when the loan is first taken out or can be requested during the life of the loan) for a period of 1-5 years.
This means that the interest rate is ‘fixed’ and will not change for the period applied for. If the market rate changes, up or down, the fixed rate will remain the same.
You can split your loans so that you have a portion fixed and a portion variable.
Of course, there are pros and cons to fixed rates.
A pro – repayments are set and you know that they will not change until the fixed rate expires.
A con – you may be liable for hefty fees if you repay the loan during the fixed rate period (eg. if you sell your house during this time or even if you want to change your loan).
Many Banks have professional package deals that can save you money on interest rates and other bank products.
An annual fee is usually payable to obtain some, or all, of the following benefits:
- No application fee for a home loan
- No monthly home loan fees
- No fees on transaction account
- Discount on the standard variable interest rate
- No annual fee on a linked credit card
- Free valuation
- Discount on related products such as insurance
The annual fee ranges from $198 to $395.
Sometimes the Banks have special promotional offers that waive the fee for the first year and in some cases for the life of the loan.
Speak to us if you would like to discuss your package features.
Low Documentation Loans are tailored for self-employed clients who are:
- Unable to provide financials and/or
- Short term self employed
Depending on the Bank, there is limited documentation required to substantiate income. Most Banks require some or all of the following:
- Applicants declaration stating income
- Accountants declaration stating income
- Last 3 months Business Transaction Account statements
- Last 4 BAS statements
Low Doc Loans have some restrictions placed on them such as Lending Ratio to be no more than 60% of the security value and Lenders Mortgage Insurance may be required.
In some instances, refinancing can save thousands of dollars over the life of a loan. With the Banks being in a very competitive environment, many are offering even further discounts on advertised interest rates.
Many clients look to refinance for the following reasons:
- To get a more competitive interest rate
- Have better features on a loan
- Dissatisfied with the service they are getting
- Unable to get an increase with current bank
- Want the personal service of a Broker
Before refinancing, your broker will go through the fees and charges (if any) to ensure that this is the right decision for you.
As with any loan, a full application needs to be done and documentation provided by you.
A refinance can take approx. 3-4 weeks depending on the outgoing and incoming Lender.
In most instances, a valuation of the security property/s will be required and a maximum loan amount of 90% is policy with most lenders.
Debt consolidation means bundling some, or all, of your current loan/credit cards into one loan. This can be a personal loan or a home loan if you have enough equity to do this.
Some of the reasons that you may want to consolidate debt are:
- Reduce overall monthly repayments
- Reduce the interest rate you are paying
- Borrow additional funds for personal use (eg car, holiday, renos)
- Reduce the amount of commitments you have to manage
Debt consolidation is not for everyone and you need to ensure that you will be in a more favourable position by doing this as, if not managed correctly, it can cost you more money in the long run.
Speak to us if you want to check if debt consolidation is right for you.
Not Just Finance
Getting a home loan is a HUGE deal and we do not take it lightly. At Aussie Dream Home Loans we want to make sure that all of your financial needs are met. We have spent many years sourcing trusted businesses with whom we can refer our clients to for services that complement the home loan process. From Real-Estate agents and solicitors, through to Financial Advisors, we know that you will be in safe hands with our referrals