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Big loans. Big savings
For clients looking to borrow more than $250,000, the best option is a professional package. On this loan package, your interest rate can be discounted up to .7% and in most instances you will have only one low annual fee with the dreaded establishment and valuation fees generally waived under this package. The savings certainly add up over the lifetime of the loan . Pinnacle Finance Brokers can find the most suitable professional package from a wide range of leading lenders.
Explaining interest rate options
Standard Variable Interest Rate Loan
The standard variable rate varies throughout the term of the loan and generally has more features than other loan types. If interest rates fall your loan rate will come down, and alternatively if rates increase so will your loan rate. On a variable interest rate loan, you can make additional repayments without incurring penalty, which means you can pay your loan off sooner.
Basic Variable Interest Rate Home Loan
Basic variable interest loans generally having limited features of a standard variable rate. Some lenders may charge you to use your redraw facility or cash back, while other basic loans may not have redraw options at all. Other lenders may only let you pay monthly instead of the normal weekly and fortnightly options. These loans may suit borrowers not wanting all the extra frills and generally have cheaper interest rates. Many investors are ideally suited to this type of loan.
Fixed Interest Rate Loan
A fixed interest loan allows you to fix the interest rate for a specified period, usually one to five years, sometimes up to 15 years. At the conclusion of the agreed fixed rate period the interest rate reverts to the standard variable rate, or you may renegotiate with the lender for another fixed rate term. The main advantage of these loans is that the borrower has a set monthly repayment. The disadvantages are that you are limited to the amount of extra repayments allowed during this period (if possible, generally there is a limit) and also if the borrower sells their home within this period they may incur a break cost fee.
The Line of Credit Loan
The line of credit loan offers the maximum flexibility. With this type of loan, you deposit your entire income into your loan account to reduce your daily interest. You then re-draw money from the loan account as you need it. This loan is suited to people with a large disposable income. The money you redraw for living expenses can be withdrawn directly from the loan account or paid for using a credit card with up to 55 days interest free. On the credit card statement due date the FULL amount is repaid by drawing the money from your loan account. You can set this up automatically through your bank so your credit card is paid out at the end of every month. It should be noted that if you are not careful with this type of loan you could you could be left owing the same amount of money after 25 years. Many investors also use this type of loan for share purchases and to receive share dividends.
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