Standard Variable Rate Loan
Standard variable rate loan is one of the most common home loan product.
The interest rate varies throughout the loan term. These loans generally offer excellent flexibility, low fees and offer great features such as an offset facility, redraw facility, no penalty for lump payments to the account, if rates go down, so will your mortgage.
- Lump-sum payments can be made without incurring a penalty.
- If interest rates decrease, your repayments will decrease.
- Often offer extra features.
- If interest rates increase your repayments will increase.
Intro Rate ‘Honeymoon’ Loan
A special introductory loan rate is offered to borrowers, a guaranteed low rate for an initial period of time (usually 12 months) after which most will revert to the standard variable rate. The rate can be fixed or variable.
- Usually the lowest rates on the market.
- Some lenders provide offset accounts on these loans.
- Opportunity to reduce the principal quickly during the ‘honeymoon’ period.
- Payments will increase after initial introductory/’honeymoon’ period
Fixed Rate Loan
For a fixed rate loan, the interest rate is fixed for a specified period, usually between one and five years. This loan gives you the certainty of knowing exactly what your monthly repayments will be and peace of mind knowing the repayments won’t rise. However you won’t benefit if rates go down during the fixed term and a penalty is usually incurred should you decide to break the loan.
- Guaranteed fixed rate, if the variable interest rates rises your repayments won’t be affected.
- Reduced flexibility.
- Extra repayments may incur a fee or be limited.
- If you pay out a fixed rate home loan early, you most likely will be charged a break cost
Line of Credit
A line of credit is a flexible transactional mortgage loan provides you with access to the equity* in your home or investment properties up to a pre-approved limit. You access the funds as required for investment or for other purposes such as a home renovations, holiday, buying a motor vehicle. The interest rate on a line of credit loan is usually a variable rate and repayments are interest only.
- You can use the money when you need it and pay it back when you can.
- Rates are generally lower than a personal loan or credit card.
- Unless care is shown it is possible to reduce the equity you have built in your home. Line of credit is only a sensible choice if you are extremely disciplined in managing your everyday finances. If you will be tempted to use the funds for spur of the moment purchases, a line of credit is probably not for you.
*Equity refers to the market value of your home minus the amount still owing on your home loan.
The most common type of construction loan involved the building or structural changes of your own home or investment property as well as a granny flat. A construction loan allows you to draw money as is required whilst building at each stage of the building process. Also, with the usual necessary documents required when applying for a loan, construction loans also require a ‘fixed price building contract’ and council approved plans. These loans are usually interest only for the period of building and then become principal and interest once building is completed.
- Competitive variable interest rates.
- Facility to draw money when necessary whilst building at each stage.
- Interest only payments during the building period.
- You can make additional payments.
- Requires a fixed price building contract leaving little room for change whilst building.
- Some lenders charge a fee for every time you draw money whilst building.
- Since it is a variable loan; loan repayments will increase if interest rates go up.
3 Sisters Finance will listen carefully to your needs, and suggest a loan that is right for you. Whenever you are ready to be taken care of, enquire now.