When one hears the word “capped”, it usually means that there is a limit or there is a certain boundary that cannot be crossed.   A capped loan similarly would mean that the interest rates have a limit set to them, and cannot go above a certain point.  This is of course limited to a certain period, which may be a number of years.

Due to the fact that a loan is capped, this simply means that no matter how high the interest rate goes up, the boundary is what would have been agreed upon in the capped loan contract.  However, when interest rates go down, the interest you pay can also go down.  This is because the cap is only applicable upwards and not downwards.

Currently, most capped home loans on offer have a 7.5% cap until 2012.  Any interest above 7.5% would not be allowable.    The lowest capped loan on offer is set at 7.49%, so one has to decide based on the product features which capped rate loan would be most suitable.  The consensus of the experts however seems to be that interest rates will stay low for the next few years.  These rates will then slowly go up once again as the effect of the subprime mortgage crisis in the United States slowly settles, and the real estate market begins to recover.

People who are on the fence can therefore, take a chance with this loan product.  It has the flexibility of a variable rate loan, and the cap is akin to a fixed rate loan where the rates are inflexible.

With the help of the experts on home loans, it would be much easier to gain access to a capped home loan.  They can also advise you if getting such a loan would be wise, and even offer different products which may compare in price to such a loan.  So do not hesitate to try and benefit from various home loan products, as they could save you a lot of time and effort.

In essence banks and lenders do require a deposit of around 20% before they approve loans of any kind.  This is to ensure that they are not exposed to too much risk, as no deposit loans is very risky business.

However, it is a fact that there are ways to get a 100% deposit home loan.  This does not mean that they come at the same price.  Because of the additional exposure taken on by banks there are usually additional costs to these no deposit loans, but several people are willing to pay these additional costs in order to get into the real estate market         earlier.

So what are the ways to get a no deposit mortgage.  There are a number of strategies that work.

One way is by paying LMI or what is commonly known as Lender’s Mortgage Insurance.  The payment of premiums for this type of insurance can eliminate the need for a 20% deposit.  It is a win-win situation as banks are protected from risk, while at the same time borrowers need not save 20% deposit and can get into the real estate market much earlier.

Another means of getting a no deposit home loan is by mortgaging another property.  The other property will serve as replacement for the deposit, and works in the same way as LMI in reducing the risk that the bank is exposed to.

Finally there is the guarantor.  The guarantor will pay where the borrower will be unable to pay.  With the help of a guarantor no deposit home loans are possible.

We at the home loan experts have access to all these types of no deposit mortgages.  We can help you select what we feel will work the best for you.  If you want to learn more about these types of loans, do not hesitate to contact us.  We will answer and provide you with quality information based on your enquiries.

Australians are known for their innovations and the desire to do things themselves.  This of course translates to many individuals who would like to build their homes to their specifications and with their own designs.  They likewise would want to handle the ordering of materials, the scheduling of construction, and other details on their own. These are the owner builders.  What these people do is build their own homes from scratch, without the help of construction companies.  Such a practice has become a trend, and a lot more people are choosing to go at it on their own, rather than rely on a construction company.

Where one is the owner builder, they can enjoy the satisfaction of building and renovating your own home.  The only limitations you have are your creativity and the amount of budget you have.  Aside from that you are totally in control.  Furthermore if you can manage the purchases of your materials well enough, and have sufficient reasonably priced suppliers, then you can keep building costs down much more than if you were relying on a contractor.  However, this can go both ways, as there is always a tendency to overspend when it comes to the materials of your home.

There are a lot of joys and advantages when one is an owner builder.  However, one of the main disadvantages is the difficulty of procuring a loan.  This is because banks and lenders are somewhat vary of providing financing to an owner builder.  There are more risks involved, and there is no guarantee that the project will be finished, hence the apprehensions of banks and lenders.

With the help and aid of the home loan experts, they can provide you with sufficient choices of providers who trust owner builders to accomplish the building of the property.  With their help it would be much easier to fulfill your dream of being an owner builder, and getting to set up and build your own home from the ground up.

When getting a loan, especially for your first home, you would like it to be as easy on the budget as possible.  This is because if it is a first home purchase, this would mean that you are just starting out, and you may not be as financially capable now as there are a lot of expenses to attend to.  The nice thing about purchasing your first home even on a loan is the fact that the government is more than willing to help out.  First home buyers often get a home owners grant, and discounts on lenders mortgage insurance.

Another thing about purchasing a first home is it would be ideal to pair it with a 90% home loan.  These loans are the most common, and banks and lenders are not that conservative when granting first home buyers a 90% loan.  Of course they require some items such as at least 5% genuine savings, and deposits are normally required especially without LMI premium payments.

Of course whether or not to pay LMI is a personal decision, and not necessarily required when applying for a 90% home loan.  This is particularly true where a deposit has already been made, as LMI is often required only when no deposit, or only a minimal deposit is made.

Those who are financially capable may try for an even larger loan of 95% of the value of the property, in that way they only need to worry about 5% of the purchase price as the 95% in already covered by the loan.

For more information on 90% home loans it would be best to consult the experts on home loans.  They can provide you with the necessary information required on how to get a 90% loan.  They can likewise advise and update you on the benefits and discounts that first home owners get when purchasing their first home.  In this way your dream of owning your own home may finally become a reality.

There is no question that needs of people change and should be flexible and be able to adjust to the times.  The same thing goes for loans.  Through the years the number of home loan products have grown to adjust to the changing times and changing financial climate.  Furthermore, the real estate business has been booming in Australia hence because of intense competition banks and lenders are busy formulating and developing products to suit the different tastes of the various borrowers.

Now the banks and lenders have come out with a new product which is the 85% home loan.  This loan is perfect for those who would like to purchase a dream home without worrying too much about strict compliance with the requirements that banks and lenders often require.  There are just certain requirements that one must meet before being allowed to get this type of loan.

The first thing to ensure before getting this type of loan is that you have a clear credit history.  Those who have a line of bad credit need not apply.  You should also have a regular source of income and a stable employment.  Hence, those who are on probation, or are only employed casually or on a project basis cannot qualify.  Because the loan is set at a fairly high 85% of the property, you should make good money with whatever employment or business you have before your loan is even approved.  Assets to support your income are likewise a plus, and if you have enough then it is highly likely that your loan will be approved.

For more information on how to get an 85% home loan it would be best to consult the experts on home loans.  They can assist you in fulfilling the necessary requirements in order to get an 85% home loan.  With their guidance, they can take you step by step through the loan procedures, and increase the chances that your loan is approved.

Bad days and good days are common in life. This also applies to the income we earn and the unpredictability of certain circumstances such as our health, natural calamities, death, and other events beyond our control.  Due to this fact, there are times when we are in good credit, and have a good credit score, and in other instances we have to cope with bad credit.  Once in bad credit loans become scarce, and hardly are offered.  Your bad credit rating has made most banks and lenders avoid you like the plague.  This is normal as banks and lenders are hesitant to take unecessary and uncalculated risks.  Dealing with a person already with a bad credit rating is a clear and obvious risk, and simply dealing with you would already be a mistake in their eyes.

Fortunately, there are other lenders who see your plight as an opportunity to make some income, and at the same time help you get a loan even when in bad credit.  Due to the risk involved they may charge you higher interest rates, but this is understandable as the risks in dealing with people with bad credit are substantially higher.  The problem is there are only a handful of these non conforming lenders, and they may be hard to find.

To enable you and help you get a home loan while on bad credit it would be best to consult the experts in home loans.  They can lead you and help you find an appropriate lender who is sympathetic and understands your situation.  They can show you the proper steps to be taken to get a bad credit home loan.

When you are looking to get a home of your own, you are willing to do a lot of research on the options available to you.  This is because buying a home is usually the most expensive purchase of your life, and any savings made because of a cheap loan can be substantial.

The first steps to take should be to look for a home that is ideal for you and your family.  Once you find the home that you feel is within your budget, then try to look for information on home loans.  However, be prepared as you may be in for a shock.  You may be shocked to find out that there are a whole lot of home loan products out there.  Going through each and every type of loan product, and understanding each and every product will take a lot of your time and effort.  To this, also add the fact that the terms used in real estate and mortgage industry are not that easy to adapt to.  This is especially true if it is the first time that you are getting a loan.

The trick is to find a place where you can get quick and reliable information on the different types of loans available.  You could read home loan articles, go to each bank and lender, or you could simply visit home loan forums.  When you visit these forums you will have instant access to information on nearly every type of home loan.  Of course, familiarization is important so a little research on certain terms should do a borrower good.  Once you’ve done your homework you already have an idea on what type of home loan you would like to get.  Armed with that information feel free to ask away on home loan forums on whatever loans you are interested in.  The response should be quick, accurate and helpful.

Once you get the information you require, then you may begin your loan application and take the first steps to owning the home of your dreams.

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.