Online Calculator | Various Types Of Home Loans – Part 3

Various Types Of Home Loans – Part 3

This is the third article in a series of articles on home loans in Australia.  From these articles, you can catch up on Mortgage News and information that can you can use to your advantage when applying for a home loan. This article continues with an analysis of the different products available today.

Lines of Credit

Over the past few years lenders have been inventing flexible products to entice customers to do business with them. A popular flexible product that has emerged from this competitiveness is the line of credit mortgage.

A line of credit is basically a flexible credit product secured against your home. The line of credit will carry an interest rate similar to rates found on other homes. This is in contrast to rates offered on other credit products, such as credit cards and personal loans, which can be quite high.

One of the key benefits of a line of credit mortgage is that it is very flexible. Borrowers can make over payments whenever they like. You can also draw down on funds you have previously paid off if you choose to. This can be done up to an agreed upper limit, which will be calculated against the value of your home.

Borrowers can have their income paid directly into the Mortgage This will help you save money by reducing the amount of interest paid each month. Disciplined borrowers could save a large amount of money over time if they did not draw down on their loan at all. This is because every unused dollar earned would sit against the home loan each day instead of sitting in a savings account.

Home owners who are looking for maximum flexibility with their home loans have flocked to line of credit mortgages, making them a popular product.

Professional Package Mortgages

If you have a number of different loan products and you would like to bundle them all together, a professional package might be for you. Professional packages allow you to group together your mortgage and other loan products in order to save on fees and interest.

By moving all your loan products into a single package, lenders can be sure that they are getting maximum value out of you. For this reason they are willing to offer discounts on interest rates and fees if you take out a professional package.

If you have a mortgage within a professional package you might still be able to get flexible options such as offset accounts.

Professional packages usually come with a hefty annual fee. This fee covers all the products within the package so there should be no other fees to pay. You must ensure that the money you save through reduced fees and interest more than makes up for the large annual fee.

You should therefore weight up the benefits against the costs of professional packages before signing up. It could be that you’ll save more money with a line of credit mortgage instead. Be sure to do your due diligence before applying for a package deal.

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