Home Loan Features
Redraw Facility – this feature allows you to make extra payments on your mortgage and then borrow from that money if needed.
Portability – this allows you to transfer your existing mortgage of your current home across to purchase a new property, so you don’t need to refinance when you upgrade to your next home.
Interest In Advance – this allows you to pre-pay next years’ interest now and claim it back as a deduction this year.
Offset Account—it is a transaction account linked to your home loan. The balance of a 100% offset account is taking away from principal remaining on the loan for interest calculation on daily basis.
Line Of Credit—it allows you to access an agreed amount of credit that can be withdrawn when you wish. The amount you use is charged with the interest.
Home Loan Type
Basic – a no frills home loan with a lower variable interest rate with minimal features and flexibility like no offset account linked.
Variable Rate – this home loan option combines a mixture of flexibility and feature. The interest rate will move with changes in the market interest rate, and the repayment amount will vary as rate changes over the term of the loan.
Fixed Rate – the interest rate of a fixed rate home loan is locked for a set period of time, often a number of years regardless of market changes to interest rates. At the end of the fixed rate term, the loan will usually switch to the standard variable rate offered by the lender.
Introductory (Honeymoon) – it offers you a competitive honeymoon rate for the first few years. It is important to remember that the rate may be extremely low for the introductory term, the revert rate at the end of the term may be much higher. However, you have the options to refinance or to ask for a market discount after this term.
Interest Only – an interest only home loan requires you to make payments only on the interest. Over the term of the interest home loan, the principle is unchanged.
Principal and Interest —a principal and interest home loan requires you to make payments on the interest accrued on the mortgage, as well as repay a part of the principal. The repayments will be higher than interest only home loan, but they will help to pay off the home loan.
Split Loan – it allows you to have one part home loan at a variable rate, and the remainder at a fixed rate. A split loan allows you to take an ‘each way bet’ on future interest rates.
Annual Fees—this is an annual loan administration fee charged by the lender.
Application (Upfront) Fees—this is an upfront fee charged by the lender for assessing the loan application.
LVR – it stands for Loan to Valuation Ratio. It’s a percentage figure that compares the amount you want to borrow against the total value of the asset your play to buy.
Monthly Account Fees – this is a monthly bank account administration fee charged by the lender.
Revert Rate – it is the interest rate your fixed rate home loan returns to after the fixed rate period or introductory rate period ends.
Valuation Fees – the lender requires their own bank valuation on your property. However, some lender may absorb the cost.
Comparison Rate –lenders in Australia are required to display a comparison rate, which combines the interest rate with common fees such as application and ongoing fees.