Buying your first property
Buying a property for the first time can be daunting, especially when it comes to deciding a loan product. At Lockwood and Ward, we assist you to find the loan that best suits you.
Things you should consider when applying for a home loan:
- First Home Owners Grant
- What is your borrowing capacity?
- Minimum deposit amount of the property
- Stamp Duty
- Lenders mortgage insurance
- Types of Home Loans
Standard Variable Home Loan
This is the most common home loans in the market. The interest rate is slightly higher than the Basic Variable Home Loan but it is more flexible as it offers extra features such as redraw facility and option to make extra repayments without penalty.
Basic Variable Home Loan
As the name implies, this type of loan has most of the characteristic of the standard variable rate loan but is offered by some lenders as a budget style loan. The main feature of this loan type is reduced interest rate. There is usually no redraw facility.
Introductory Home Loan
These loans operate the same as the standard variable loans but they have a period in the beginning of the loan where the interest rate is lower than the standard rate. This is usually approximately 1% lower for the first 6 to 12 months of the loan. After this period has expired, the interest rate will revert to the lender’s standard variable interest rate.
Fixed Rate Home Loan
These loans have interest rate fixed for a certain them and therefore the repayments remain constant. This loan is available for the borrower who wants certainty in their interest rate and repayments for a contracted period of time, thus protecting themselves from any increase in rate. These loans are usually fixed between 5 to 10 years.
Line of Credit Home Loan
The interest rate on a line of credit loan is usually a variable rate and repayments are interest only. The interest is calculated on the daily outstanding balance and is debited monthly to the account. The minimum repayment on the account must therefore be the interest charged. The account is usually operated in a way that the borrower deposits wages to the account and then uses a credit card for monthly purchases. One withdrawal is then made to pay off the credit card. This keeps the loan account balance as low as possible for the month, and therefore the interest that has been calculated throughout the month is on the reduced balance.
100% Offset Account
The offset account operates like a savings account, where you receive interest income at the same rate as the interest charged on your home loan. The money you have in the offset account is directly offset against the balance of your home loan; therefore the home loan interest charged is base on the balance of your home loan minus savings in offset account.
How the offset account does operate?
- Deposit your salary/income to your offset account
- Repayments are made from the offset account to the loan account
Property Investment Analysis
When you purchase investment property, it is paramount to make sure that your investment is secure. At Lockwood and Ward, we assist you to protect your investment and your returns by preparing cash flow projections, internal rate of return, tax benefits and home loan analysis.
Mortgage Health Check
A home loan is probably one of the biggest financial moves you will ever make. Therefore it is vital to check that the mortgage is a perfect fit if you are going to wear it for a long time to come. If this is not the case and the loan is already a burden, then maybe it is time to look around for a better appropriate product.