Home Loan Borrow

Buying Your Own Home

Whether you are buying your next property or are a first home buyer, conducting comprehensive research on new products in the market could save you money and reduce the life of your home loan. The constantly changing home loan market and changes in your personal circumstances mean that a home loan that was once the most suitable for you may no longer be in your best interest. Before making any major finance decisions, you need to develop an understanding of new products in the market; the following is a brief outline of the options you may consider when buying your next property.

Bridging Finance

Coordinating the sale of your current home with the purchase of a new property can be a colossal task. This situation can be aggravated if you are forced to sell your existing home at a low price because you are under considerable pressure to finance the new property. In such instances, a Bridging Home Loan is often used to cover the finance gap.

A Bridging Home Loan is a temporary loan providing financial cover which allows you to buy or build your new home before you sell your current home. This enables you to buy the property you want, without being held back by any lengthy sales processes.

Equity Finance Mortgages (EFM)

An Equity Finance Mortgage (EFM) allows you to borrow up to 20% of a property's value and works in conjunction with a traditional home loan. Under the EFM, you are not required to make any regular monthly interest repayments throughout the loan, which you can hold for 25 years. When you sell the property or repay the EFM, you repay the EFM amount you originally borrowed plus any additional profit you make from the sale of your property(40% on a 20% EFM loan or 30% on a 15% loan). If the value of your home should drop, and you are forced to sell the property at a loss, then the EFM lender will also share in this loss.

An EFM allows you to:

Reduce the upfront and ongoing costs of purchasing a new property.
Reduce your current monthly mortgage repayments (via a refinancing of your existing loan)
Buy a more expensive property than you may otherwise be able to afford.

More Information From an EFM Accredited Broker

If you would like to talk confidentially with an accredited EFM broker about your EFM options or to find out which home loan options are in your best interest, call us on 13 LOAN (or +61 2 9249 3739 for international callers) or email us the form on this page and we will return your contact within 2 business hours.


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Standard Variable Rate Home Loans

If you are looking for a home loan that is flexible with the added benefit of extra features, then you cannot afford to disregard a Standard Variable Rate Home Loan.

Most borrowers prefer Standard Variable Home Loans because they are considered the most flexible and may include features such as the ability to make extra repayments, redraw funds or split your loan. The interest rate on a standard variable is also not locked in as it moves up and down in line with the Reserve Bank of Australia's interest rate fluctuations.

Basic Variable Rate or No Frills Home Loans

Basic Variable Rate Home Loans are sometimes referred to as 'no frills' loans and tend to offer a lower interest rate than Standard Variable Home Loans. However, Basic Variable Home Loans offer fewer features and less flexibility than standard variables. In general, if you require extra flexibility (such as a redraw facility) you may have to pay for it.

Fixed Rate Home Loans

The security of having set loan repayments irrespective of interest rate fluctuations is why many Australians opt for Fixed Rate Home Loans. Variable rate products are still more popular in Australia, but fixed rates are gaining popularity.

Fixed Rate Home Loans are based on a fixed rate for a set term, usually between six months and 10 years. When the fixed-rate term expires, the loan will usually revert to a variable rate loan unless you decide to rollover for another fixed term. While fixed rate home loans offer the certainty of fixed repayments they do not allow you to make additional repayments.

Combination or Split Home Loans

As the name suggests, Combination or Split loans, allow borrowers to take part of their loan as a variable rate and the other as a fixed rate. While each part of the loan is treated separate when the loan contract is drawn up, the overall loan amount is still considered your “total”.

As each individual situation is different, talk to your local mortgage broker to find out if a combination or split home loan is right for you.

Introductory or Honeymoon Rate Home Loans

Introductory or Honeymoon rate home loans offer a low interest rate for an introductory period, usually for the first year. An introductory rate may be as much as one percentage point below the standard home loan rate and could be fixed or variable. Once the introductory or honeymoon period is finished, the interest rate usually reverts to a higher rate. Not all honeymoon rate home loans do this, you would need to check with your mortgage broker to find out which ones do.

Professional Packages

If you are borrowing more than $150,000 you might be able to get a discounted interest rate with a Professional Package. The amount of the discount will usually be dependant on the loan amount - the bigger the loan amount, the bigger the discount.

More information or help

For confidential assistance with your home loan or to talk to your local mortgage broker, call us at any time on 13 LOAN or call our direct line on +61 2 9249 3739.