Home Loan Rate – Australia

When you have kids, they often live with you their entire lives, then when you see them off to college, they will slowly become more independent and want a life apart from you.  Of course parents will have a hard time letting go, but that is what parents do.  They want the best for their children and seek to provide only what is good for them their entire lifetime.

For some parents, one of the best gifts they could give their children  during their college days is a decent place to stay so they can hone and develop their talents without needing to worry so much about their living space.  This is the reason why some of them buy instead of rent student housing for their child.  That way they can really choose a student housing that is to their liking, and their child has the privacy that a budding university student requires.

For some of these parents, funding may not be a problem at all, and paying for student housing may be just part of an incidental investment plan when their children finish their course in the university.  For others, it is not this simple.  Some parents may not even be able to afford student housing, so they may have to apply for a loan in order to be able to purchase such property.

The problem is that not many banks or lenders would grant a loan for student housing or student accommodations.  For one, student accommodation is seasonal, so if it is bought for investment, the rentals and lease usually happens only the school season, and the housing is empty during the holidays.  Another risk that lenders and banks refuse to take is the fact that these types of housing may be difficult to dispose of in case the borrower is unable to make the required repayments.

For more information on purchasing student housing, it would be best to consult the experts on home loans.  They can advise you as to which banks or lenders will be more than willing to grant your home loan application for student housing.  They will also ensure that you get the best loan package available as not all loans are created equal.  With their help, you should be well on your way to buying the student housing to suit your child’s needs.

There is no question that Australia is a land of opportunity.  The huge continent is home to a small population that has yet to fully take advantage of the country’s real estate potential.  Recent news suggests that the housing market in the United States has hit an all time low, with housing prices and purchasing down and out. This makes Australia an ideal alternative to invest in. The diversity of the country and the constant rising prices of real estate, the rich natural resources, and the diverse and beautiful areas to choose from make Australia an ideal option for multiple investments in real estate.
The nice thing about this fact is that foreigners may freely invest in Australia, all they need is government approval and once this is granted then investing may be done. There are various options available to potential investors. The choices of investments can range from purchasing vacant land, multiple units on one title, off the plan units, student accommodations, dual occupancy units, hotel conversions, and all the way through to mining towns.
These numerous options are what make Australia a great place to invest in and the property value will vary greatly depending on what type you choose to invest in. This means that the price of the property can range from very cheap to extremely expensive.
For more information on possible real estate investments in Australia, it would be best to consult the experts on home loans.  They have the information on the best possible investments and with the most potential for real estate.  They can also custom fit certain loan products to your capacity to invest and the amount of risk that you are willing to take.

A year after the subprime mortgage crisis struck the United States, the effects are still being felt around the globe.  There is an economic slowdown, and prices of real estate have not yet fully recovered.  Buyers and investors are also looking for alternative places to invest their money, and trying to find safe havens for sure and steady earnings.

Fortunately for some investors, they have found this safe haven in Australia.  Prices of real estate have been steadily on the rise, and there has not been much depreciation felt in majority of the country.  Of course those looking for good deals and real estate bargains can simply do a little more research, and find that investment opportunity abound.

Investors whether foreigners or citizens can choose from a variety of investments.  They can try purchasing off the plan units, or buy multiple apartments on one title.  Student accommodation purchases are also common and purchasing properties in mining towns can also be an option.  Vacant land can likewise be purchased and later developed, and high end properties worth millions can also be purchased by prospective investors.

With the wide variety of choices of real estate properties to invest in, it would be nearly impossible not to find an interesting property for possible investment.  Considering that the land area in Australia is huge, the potential for expansion of real estate is endless, and the possibilities are limitless.  With a stream of constant investment opportunities, and unlimited choices, an investor could not ask for more.

In order to make sure that you are able to make the most of your time and money it would be best to consult the experts on home loans,  They can provide you with the necessary information, and provide you with the details of investment opportunities in Australia. They can also ensure that you are able to provide the proper documents when you engage in investing and real estate related purchases in Australia.

Mortgage managers, banks, credit unions, brokers, insurance groups all offer a seemingly endless choice of loan options – introductory rates, standard variable rates, fixed rates, redraw facilities, lines of credit loans and interest only loans, the list goes on. But with choice comes confusion. How do you determine what the best type of home loan is for you?

First, set your financial goals, determine your budget and work out how long you want to pay a mortgage for. You can do this yourself or with your financial advisor or accountant.

Second, ensure the organization or person you choose to obtain your mortgage from is a member of the Mortgage Finance Association of Australia (MFAA). The MFAA Member logo ensures you are working with a professional who is bound by a strict industry code of practice.

Third, research the types of loans available so you can explore all options available to you with your mortgage provider. Some home loan choices are:

Basic Home Loan

This loan is considered a no-frills loan and usually offers a very low variable interest rate with little or no regular fees. Be aware they usually don’t offer additional extras or flexibility in paying of extra on the loan or varying your repayments.

These loans are suited to people who don’t foresee a dramatic change in personal circumstances and thus will not need to adapt the loan in accordance with any lifestyle changes, or people who are happy to pay a set amount each month for the duration of the loan.

Introductory Rate or ‘Honeymoon’ Loan

This loan is attractive as it offers lower interest rates than the standard fixed or variable rates for the initial (honeymoon) period of the loan (i.e. six to 12 months)

before rolling over to the standard rates. The length of the honeymoon depends on the lender, as too does the rate you pay once the honeymoon is over. This loan usually allows flexibility by allowing you to pay extra off the loan. Be aware of any caps on additional repayments in the initial period, of any exit fees at any time of the loan (usually high if you change immediately after the honeymoon), and what your repayments will be after the loan rolls over to the standard interest rate.

These loans are suited to people who want to minimise their initial repayments (whilst perhaps doing renovations) or to those who wish to make a large dent in their loan through extra repayments while benefiting from the lower rate of interest.

Tip: If you start paying off this loan at the post-honeymoon rate, you are paying off extra and will not have to make a lifestyle change when the introductory offer has finished.

Redraw Facility

This loan allows you to put additional funds into the loan in order to bring down the principal amount and reduce interest charges, plus it gives the option to redraw the additional funds you put in at any time. Simply put, rather than earning (taxable) interest from your savings, putting your savings into the loan saves you money on your interest charges and helps you pay off your loan faster. Meanwhile, you are still saving for the future. The benefit of this type of loan is the interest charged is normally cheaper than the standard variable rate and it doesn’t incur regular fees. Be aware there may be an activation fee to obtain a redraw facility, there may be a fee for each time you redraw, and it may have a minimum redraw amount.

These loans are suited to low to medium income earners who can put away that little extra each month.

Line of Credit/Equity Line

This is a pre-approved limit of money you can borrow either in its entirety or in bits at a time. The popularity of these loans is due to its flexibility and ability to reduce mortgages quickly. However, they usually require the borrower to offer their house as security for the loan. A line of credit can be set to a negotiated time (normally 1-5 years) or be classed as revolving (longer terms) and you only have to pay interest on the money you use (or ‘draw down’). Interest rates are variable and due to the level of flexibility are often higher than the standard variable rate. Some lines of credit will allow you to capitalise the interest until you reach your credit limit i.e. use your line of credit to pay off the interest on your line of credit. Most of these loans have a monthly, half yearly or annual fee attached.

These loans are suited to people who are financially responsible and already have property and wish to use their property or equity in their property for renovations, investments or personal use.

All In One Accounts

This is a loan which works as an account where all income is deposited in the account and all expenses come out of the account. The benefit of the All In One Account is its ability to reduce the amount owed and thus the interest payments while providing a one-stop finance shop where your loan, cheque, credit and savings accounts are combined into one. Normally these loans will be at the standard variable rate or slightly higher and may incur monthly fees. Be aware that if the account is split into the loan account, with credit, cheque and ATM facilities placed into satellite accounts, you will need to check your access to funds, how many free transactions you receive, and what associated fees the loan may have.

These loans are suited to medium to high income earners.

100% Offset Account

This loan is similar to an All In One Account however the money is paid into an account which is linked to the loan – this account is called an Offset Account. Income is deposited into the Offset Account and you use the Offset Account for all your EFTPOS, cheque, internet banking, credit transactions. Whatever is in the Offset Account then comes directly off the loan, or ‘offsets’ the loan amount for interest. Effectively you are not earning interest on your savings, but are benefiting as what would be interest on savings is calculated on a reduction on your loan. The advantages are similar to the All In One Account. These loans normally have a higher interest rate and higher fees due to their flexibility.

These loans are suited to people on medium to high income earners, and to disciplined spenders as the more money kept in the offset account the faster you pay-off your loan.

Partial offset account and an interest offset account are also available.

Split Loans

This is a loan where the overall money borrowed is split into different segments where each segment has a different loan structure i.e. part fixed, part varied and part line of credit. Often called designer loans, you benefit from one or more types of loans. Splitting the loan offers a saving on stamp duty and other charges.

These loans are suited to people who want minimize risk and hedge their bets against interest rate changes while maintaining a good degree of flexibility.

Professional Package

This loan is available at a minimum amount to people on higher incomes or people of a specific profession if they meet certain requirements. The benefit of this loan is being able to borrow higher amounts with a high degree of flexibility and a discount on the standard variable interest rate. The level of discount is dependent on the size of the loan, and the duration of the discount depends on what’s negotiated and can sometimes apply for the life of the loan. Generally these products combine all fees into the one annual fee. Lenders of this product usually provide a lot of added values such as credit cards, discounts on their insurance and investment products.

Tip: If you don’t need the additional extras other loan types may offer a better interest rate.

Non Conforming Loan

These loans are only available from non-bank lenders where interest rates are higher due to the greater risk and shorter life of the loan. The advantage is they are available to people who don’t fill the traditional lending institution criteria. There are two types of Non Confirming loans:

1. A Low Doc Loan usually has a slightly higher interest rate and fees than the standard interest rate and will have a maximum borrowing amount and/or will usually only lend 70% of the value of the property. After demonstrating the ability to meet the payments the interest rate will often revert to the standard rate.

   These loans are suited to people who do not wish to disclose their income or have the inability to show a true income i.e. if you are self employed.

2. Sub-Prime Loans usually have a much higher interest rate and fees than the standard rate and usually require you to use an asset as security. They are based on a sliding scale in accordance to the level of risk of loaning the money. Refinancing is available once the borrower can establish a good payment record.

   These loans are suited to people with poor credit histories.

Other Loans and Products in the Market Include:

Construction Loans: For those building a home when you don’t need the entire amount from the start – you only pay interest on what you’ve spent over the stages of construction.

Bridging Loans: For when the sale of an existing property takes place after the settlement of a new property – when you want to buy a new home before selling the old one, where the funds from selling the old home are paid straight into the loan for the new home.

Consolidation Loans: Enables you to use your mortgage to consolidate other debts such as credit cards, personal loans, car loans etc. – interest rates on the mortgage are usually cheaper than personal loans.