At Loanworx we assist clients in finding a suitable home loan product that is competitively priced. This can be extremely difficult for a consumer due to the amount of choice available in the market. Loanworx have 40+ lenders to choose from and 400+ lending products.
Would you investigate 40+ lenders personally to compare products if you didn't use Loanworx? We are happy to do this research for you at no cost.
The purpose, available facilities, flexibility, banking requirements, fee's and charges are all things that must be considered as well as looking at the interest rate. Once you have found the most suitable products for your circumstances you need to compare the pricing.
Do you understand the three main loan structure types?
- Variable/Fixed Rate Loan
- Variable/Fixed Rate Loan with Offset Account
- Line of Credit
Standard Variable/Fixed Rate Loan
A variable/fixed rate home loan is a very common loan structure. For many borrowers, a standard home loan offers the right mix of features, flexibility, interest rate and fees.
At a glance
- repayment flexibility
- ability to make additional repayments
- redraw facility
- split loan feature
- portability
- may offer direct deposit salary, rental or dividend income, credit/debit card and line of credit facility
- can be used for building purposes
- higher interest rates
Variable/Fixed Rate Loan with Offset Account
A mortgage offset account is simply a savings account linked to your loan account. Unlike an all-in-one loan that combines your credit card with your transaction accounts, an offset account works like a regular savings account. The big difference is that the balance in the savings account is offset against that owing on the mortgage. Any 'notional' interest on savings is earned at the same rate as the linked loan.
Over time, savings in your offset account can help to reduce the loan principal, allowing you to pay off your loan sooner or build up equity.
Line of Credit
A line of credit home loan is similar to a credit card, They allow you to withdraw funds up to a set limit at any time. Repayments can be made in full or on a monthly basis.
This type of loan can be used to purchase most types of property, from the family home to an investment property. As long as you make the minimum monthly repayments, you can use the line of credit to carry out renovations, invest in shares or pay the bills.
At a glance
- easy access to funds, with most line of credit facilities offering cheque books, plastic cards, Internet and phone banking and a range of transactions
- withdraw up to your credit limit without having to gain pre-approval
- credit limit amounts are usually higher than credit cards
- interest on the credit facility can be minimised by directing all your income into your home loan account.
- consolidate your debts by transferring other debts such as personal and car loans into your mortgage