Naruli Finance and Investments can assist you with all your housing loan requirements. We will work together with you to find the right loan that suits your immediate and future needs.
• Variable A standard variable home loan is far more flexible, with many offering additional features such as redraw facilities, chequebooks, the ability to make lump sum payments or to transfer your loan to another property in the future. A basic variable home loan is generally about 1 per cent cheaper but offers few added services. Either way, with a variable loan your repayments tend to change as interest rates change. If they go up, so do your repayments, but if they fall, then you benefit from reduced mortgage repayments.
• Fixed If you think interest rates will rise or you prefer to have some certainty about your repayments over the term of the loan, a fixed loan may be more suitable. Traditionally fixed loans don't offer the same flexibility as variable ones, so check out what each lender offers. Fixed terms are usually for one, three or five years, with the rate varying between each. However, if you lock into a fixed mortgage and rates fall, you'll miss out on the lower rate unless you want to pay a penalty for terminating the fixed loan so you can move into a variable one.
• Home equity loan The more you pay off your home loan, the more of the property you own or the more 'equity' in the property you build up. With a more flexible banking system these days, it is possible to borrow against this equity for further investment; a second property, shares etc. The advantage of borrowing against this equity rather than taking out a personal, investment or business loan is that the interest rate will invariably be lower the better the asset you put up as collateral, the better the terms a lender will offer. But remember the security for this loan is your home.
• Introductory loan - (Honeymoon rates) Many lenders offer so-called honeymoon rates. These loans can be significantly lower than the prevailing variable interest rate. But they are only for a limited time usually six to 12 months. Then they revert to the standard variable rate. In some cases, lenders lock you into a variable rate for a number of years after the end of the honeymoon period, so it's worth checking whether this is the case.
• Line of Credit A redraw facility allows you to make additional repayments on your mortgage, and then have access to the additional repayments if you need to. While may seem great, nothing is for free, the facility is normally only available on Standard Variable loans, which are more expensive than basic variables. Before you make any decisions, understand the conditions attached to the redraw facility as it may include a minimum amount and a fee when you use it.
• Bridging finance Bridging finance has long been viewed as the expensive answer to the dilemma of having bought one home without having sold your existing property. Most banks have some form of bridging finance, which are generally negotiated on a case-for-case basis. One solution is to capitalise the extra interest and pay it back when you terminate the bridging loan.
• Deposit Guarantee Bond Another problem when buying your second home is the need to raise the deposit for the new property when all your capital is tied up in your current house. Many lenders offer a Deposit Guarantee Bond which allows you to borrow the funds for the deposit at a very affordable rate, e.g. $20,000 for as little as $220 for a period of up to 18 months.
• Investment Property loans Banks and other lenders will lend you money to buy a property to rent. They will only lend a proportion of the property value and will hold a mortgage over the investment property (and maybe also over your own home). Property loans are usually repayable over a long period (for example, 30 years) and the interest rate can be fixed, variable or a mixture of both. Sometimes these loans are set up as interest only meaning you pay the interest but do not repay the capital. The capital would only be repaid if the home was sold.
• Split Purpose Loans Allow you to pay off an investment and a home loan through a single account. Interest on the investment repayments are tax deductible, but the home loan interest is not. This basically means you can pay off your home loan quicker, allowing the interest to gather on the investment loan, and deduct it from your annual tax. Pros: Possible thousands of dollars tax savings Leverage for existing home loan equity into profitable investment Cons: Suited to high income earners
• Low-Doc Loan or no-doc loan is ideally suited for investors or self employed borrowers looking to refinance purchase or renovate. No tax returns or financial reports are required. Pros: A simple income declaration form required. No tax return No financial records Fully serviceable loan options, redraws, line of credit, variable or fixed rates, P&I or interest only loans. Cons: Generally means a higher rate of interest
