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Transcript of Home & Investment Loans - Edge€¦ · " = 7 ; 8 ;# 8 ` N S 7 8 S 1 = 8 N ;
Home andInvestment Loans
B U Y I N G P R O P E R T Y - WE A T H E R I T B E Y O U R OWN H OM EO R I N V E S T M E N T I S O N E O F T H E B I G G E S T D E C I S I O N S
Y O U W I L L E V E R M A K E
E D G E S P E C I A L I S T A D V I C E N E T W O R K
H O M E A N D I N V E S T M E N TL O A N S
P A G E 1
Table of Contents
Home and Investment Loans
Buying a property - whether it be your own home or an
investment property is one of the biggest decisions you will
ever make . There are many aspects of property loans that
you need to be aware of .
Listed below is a breakdown of the different types of home
loans available to borrowers :
Loan Types - 2
Pre-Approval - 3
Purchases - 4
Refinances - 4
H O M E A N D I N V E S T M E N TL O A N S
P A G E 2
Home and Investment Loans
Most people take out a principal and interest
home loan , where you make reqular payments
against the principal (the amount borrowed) as
well as paying interest . This type of loan is
designed to be repaid in full over the life of the
loan .
P R I N C I P A L A N D I N T E R E S T
I N T E R E S T O N L Y
As the name suggests , your repayment amount
will only cover the interest on this loan . The
principal amount you borrowed will not reduce
unless you choose to make extra repayments .
Paying interest only may cost you more over
the term of the loan because you 're paying
interest on a principal that doesn 't reduce .
F I X E D
Fixed rate loans lock in your interest rate for a
period of between 1 and 7 years . The biggest
draw card of choosing a fixed rate loan is your
repayments will remain consistent during the
fixed term , which makes this type of home loan
popular for first home buyers or those on a
strict budget .
V A R I A B L E
This is the most popular type of home loan in
Australia . The interest rate you pay many vary in
line with movements in market interest rates ,
so you can expect the repayments to vary (up &
down) over the course of the home loan .
S P L I T R A T E
Many lenders will let you fix one part of your
home loan , while the remaining portion has a
variable rate . This can give you the best of both
worlds - some protection from rising rates
through still with the ability to benefit from any
rate cuts .
O F F S E T
This is a savings or transaction account linked
to your home loan . Your account balance is
taken off the amount you owe on your home
loan , reducing the amount of interest you pay .
For example , if you have a home loan of
$500 ,000 and a balance of $20 ,000 in your
offset account , you only pay interest on
$480 ,000
R E D R A W
Having a redraw facility allows you to pay extra
money into your loan that you can take out (or
redraw) later if you need it .
The extra money you pay into the loan reduces
your loan balance which reduces the interest
you pay . Your loan balance will still reduce
each month according to the terms of your
loan .
P A C K A G E
A package home loan , sometimes called an 'on
going discount ' home loan , combines a home
loan with other financial products - usually a
transaction account and/or credit card .
H O M E A N D I N V E S T M E N TL O A N S
P A G E 3
Home and Investment Loans
These are home loans designed for self-
employed people who don 't have all the
financial documents providing proof of income
normally required to secure a home loan . A
low-doc loan can be either fixed or variable
through the rate is generally higher than for a
standard variable or fixed home loan .
L O W - D O C Get legal representation - It 's a good idea to
get a legal rep to arrange the whole property
transfer process . While this contract is usually
prepared by the seller 's solicitor , your legal rep
should check the details and make sure zoning ,
heritage or title restrictions don 't clash with
your intended use of the property They should
also check that the property rates and taxes are
paid up , that the seller is actually entitled to
sell the property and assist you with organising
property inspections (such as building and
pest).
Prepare for settlement - This is when you need
to organise your finance and take out insurance
on your purchasing property . Settlement of the
property is when the balance of the purchase
price is paid , the keys are handed to you and
your lender will receive the transfer document
and title deed .
R E F I N A N C E S
P R E - A P P R O V A L S
A loan pre-approval is an estimation of your
borrowing capacity based on your current
financial positions . It give you an idea of how
much you can borrow based on your income ,
spending , assets and liabilities .
After the pre-approval assessment , the lender
determines the possible loan amount as per
your application .
- You know your maximum purchase price
- You know that your personal situation meets
their lending criteria
- Your pre-approval is valid for 3-6 months
P U R C H A S E S
So you 've found your property and agreed on a
price with the sweller . What 's next?
Exchange Contracts - The first important paper
to be shuffled is the contrac of sale . Neither
you nor the seller is legally bound to go ahead
with the sale until a written , signed contact is
exchanged .
Refinancing your home loan can provide a
valuable opportunity to save money , access
improved loan features or tap into home
equity . But it 's a big step and it 's worth
knowing what 's involved
- Your current interest rate is no longer
competitive
- A major change has occurred in your financial
situation
- You 're looking for money to pay for something
such as a home renovation , child 's education or
another property investment .
- You want to switch to a fixed rate at an
opportune time
- You want to consolidate your other debts .
Features of Pre-Approvals
When does it makes sense to refinances?
H O M E A N D I N V E S T M E N TL O A N S
P A G E 4
Home and Investment Loans
- You do not plan on owning the property for
much longer
- You have a locked in loan such as a fixed
interest rate loan that will involve high fees to
break
- Your credit history has taken a hit due to
outstanding debts
- You don 't have a reliable source of income .
When it does NOT make sense to refinance?
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