For most people, an attractive interest rate and low fees are some of the most important features. For others it is having the flexibility of a redraw facility, ability to make additional payments or have an offset account.

At Australian Mortgage Brokers we offer personalised one to one service in helping you find the loan that is right for you. We will explain, in detail, the different products and features on offer and find the loan that best suits your needs.

Standard Variable Loan
A Standard Variable loan is one of the most flexible loan types.  The interest rate on these loans will vary during the loan term depending on the market conditions. The features of a Standard Variable rate loan vary depending on each individual lender but these loans generally offer an offset facility, redraw facility, no limits on additional repayments, loan splitting, and in most cases no early pay-out penalties. A standard variable loan can usually be combined with other types of loans and are ideal for the borrower wishing to pay their home off sooner rather than later.

Basic Variable Loan
Basic variable rate loans are sometimes referred to as the 'no frills' alternative to the standard variable rate loans. The interest rate is lower then a standard variable loan, making them attractive to the budget conscious borrower wanting a lower variable rate but often have fewer features available.  Many basic variable loans now allow additional repayments and have redraw facilities.

Introductory (Honeymoon)
An Introductory variable rate loan generally offer's a guaranteed low rate for an initial period of time (usually 12 months) after which most interest rates will revert to the Standard Variable Rate. An Introductory Loan is attractive for the borrower wishing to take advantage of the cheaper rate during the honeymoon period and settle into the loan before taking up the features and advantages of a Standard Variable Rate Loan.  With an introductory (honeymoon) rate you need to consider what rate you will be paying at the end of the honeymoon period as the lowest interest rate initially doesn’t necessarily mean the best deal overall.  Introductory rate loans usually have high exit fees in the first few years.  Introductory loans can be both variable or fixed during the honeymoon period.

Fixed Rate Loan
Fixed rate loans are where the interest rate is guaranteed or locked in for a pre-determined period of time, most commonly between 1 and 5 years. This gives the borrower the stability of knowing exactly what their monthly repayments will be during this period. Most lenders limit the amount of additional payments allowed during the fixed rate period. Some lenders may impose early repayment penalties if  the loan is paid out during the fixed period. However a fixed rate loan is ideal in a rising interest rate market as this guarantees the interest rate and repayments for a set period of time.

Bridging Loan
A Bridging Loan is available to borrowers for a short period of time (usually 6 to 12 months) who wish to purchase a new home before selling their current home. These loans are especially helpful to 'bridge' the gap between the sale of one property and the purchase of another. The interest rate on a Bridging Home Loan is usually the same as a Standard Variable Rate Loan and interest only during this period. A Bridging Loan ensures that the borrower will not miss out on a desired property because they haven't sold their current home. A bridging loan is short term finance as the loan will be repaid on the sale of the existing property.

Line of Credit
A Line of Credit (Home Equity Loan) provides the borrower with access to the equity in their property whenever they wish.  The main feature of this type of loan is that the borrower has a reusable limit. It is similar to an overdraft facility in that funds can be withdrawn up to the original approved loan amount at anytime. These loans are often referred to as "revolving" or "evergreen" loans. The interest rate on a Line of Credit facility is usually a variable rate that fluctuates with the market. A Line of Credit loan is usually operated as an all in one account where borrowers can generally access their Line of Credit via a Cheque Book, Credit Card, ATM, Phone and Internet. A Line of Credit provides a borrower with easy access to funds ensuring peace of mind in times of need.

Construction Loans
Construction loans are for customers look to build on an existing block of land, or can be also used for a house & land purchase.  The loan balances increases progressively during the construction period and the repayments required increase as the loan balance increases.  During the construction period repayments are usually interest only until the house is completed.  Loans will revert to principal and interest at the completion of construction and sometimes the product can be changed at this time.

Credit-Impaired Loans
There can be various reasons why some borrowers may have experienced difficulty in meeting their monthly commitments in the past.  It could be due to lack of work, unexpected business losses or had a difference of opinion with a former credit provider.  This does not necessarily mean that these borrowers will default on future loans.  Some lenders have realised this and have Non Conforming Home Loans available in the marketplace.  This enables borrowers with bad credit history or even bankrupts to take out a mortgage.

Credit-Impaired Loans are designed especially to assist a borrower in these circumstances. Usually these loans incur an extra interest rate margin and possibly extra fees and charges.  The greater the risk, the greater the interest rate.  Whilst it is preferable to have a lower interest rate, at least it can get you back in the property market.

Low Document Loans
If you’re self employed it can sometimes be difficult to document your financial position with traditional payslips, tax returns or business financials to satisfy normal lending criteria.  Low Documentation (or No documentation) loans are designed for the self-employed or small company borrowers whose financial statements may not be available for many different reasons eg Accountant hasn't completed their bookwork. The borrower must have a reasonable deposit or equity in existing real estate property.

These loans are often restricted to a smaller choice of lenders and products available. A Low document loan can be just as competitive as mainstream lenders, however they provide less hassle for borrowers who don't have the more traditional income documentation.

Professional Packages
Many lenders offer Professional Packages which are based on loan amount and offer rate discounts depending on the amount of borrowings.  Professional Packages are usually based on a Standard Variable loan with all the features that come with this product with the added benefit of the rate discount.  These packages usually come with an annual fee which covers several loan splits.

Reverse Mortgage (Seniors Loan or Equity Release)
These loans are designed for people who are past the retirement age who would like to access some equity in their home.  These loans can be variable or fixed and repayment is made on the death of the borrower(s) or when the property is sold.  Payments can still be paid if the borrower(s) choose.  Ideal for retirees who are asset rich but cash poor.

Family Equity Loans
Family Equity loans can assist borrowers in buying a property who have a small or no deposit.  Usually it is the parents who assist by allowing their children to borrow a portion of the funds required using the equity in their home.  Some lenders allow other family members also, including siblings.

Using a Family Equity loan can save the borrowers money also as they can avoid lenders mortgage insurance which can sometimes be costly with a small amount of savings.  The parents (or other family member) are guarantors for the borrowers for the portion which accesses their equity.

100% Loans
Several lenders have loan products where the borrowers can borrow 100% of the purchase price without any deposit   These products generally have strict conditions but can be an ideal way for buyers to enter the property market.   Interest rates on these products are usually higher and can come with some additional fees.





Interest Only
An Interest Only Repayment Facility is usually available on Investment Loans and usually for a period of up to 5 years, although some lenders will extend to 10 years as interest only. The interest is calculated on the original borrowed amount and requires no principal reduction. These loans are usually chosen by investors who are seeking to maximise tax deductions.

100% Mortgage Offset Accounts
A Mortgage Offset Account gives you all the features of a normal transaction account, but instead of earning interest, you can use the account balance to offset against the loan balance, therefore reducing the interest charged . Any money you put into the offset account is deducted from your home loan balance before the interest is charged. A great way for a borrower to use their savings to reduce the interest charged on their home loan.

Redraw Facility
Most loan facilities have redraw facility, whereby you can redraw any additional funds you have made over and above the minimum loan repayments required for the loan. Some loans will attract a fee when the redraw facility is used, while many now offer free redraw via internet banking. A loan with a Redraw Facility works similar to an, 'all-in-one' facility. With some loans the borrower can deposit all of their income and savings into the loan and then they can withdraw the money from the home loan account for all their day-to-day expenses.

Another excellent way to save interest on your home loan is to make your day-to-day purchases on an Interest Free Credit card and 'redraw' the full balance of the card at the end of the interest free period to pay the card off in full.

Split Loans
A split loan is ideal for a borrower who wishes to have two loan products rather than one. An example is a borrower who wants to take advantage of a fixed rate loan product in combination with a variable rate loan product. The borrower can fix a portion of their loan to provide stability of interest rate and repayment but still allowing themselves the flexibility to make additional and lump sum repayments on the variable portion of the loan.