100% OFFSET ACCOUNT

A 100% offset account is a separate savings account attached to your home loan. Your income is deposited into the transaction account and you would generally use it for all your daily expenses. The 100% offset account operates like a transaction account with cheque and ATM access.

The balance in the savings account is offset against that owing on your home loan and you only pay interest on the outstanding net balance. Over time, the savings in your offset account can help reduce the loan principal, allowing you to pay off your home loan sooner and build up equity in your property.

Advantages of a 100% offset account

• Savings interest is taxable, but because your offset account balance is used instead to reduce your home loan interest, no tax is payable. You are effectively reducing your tax bill

• The interest rate on your offset account is the same as that applied to your home loan account. This rate is much higher than what you could earn on most savings accounts. The interest rate moves with your loan account rate, ensuring you get maximum benefit from each dollar in your offset account

• The money in the offset account is deducted from the loan balance before interest is calculated. This effectively means that your savings are earning interest at the same interest rate as your home loan

• The offset account is much like a savings account. It offers ATM access and a cheque book

• Available on most mortgage lenders' standard variable and introductory rate mortgages

• Any extra money in your transaction account saves you interest on your home loan, thus shortening the term of the loan

Disadvantages of a 100% offset account

• You  may have higher monthly fees attached to the account

• Some mortgage lenders may require you to hold a minimum balance in the account, for example, $2,000 for the offset effect to be calculated

For more information about an offset account or any of the other home loans or investment loans available, speak to one of the mortgage brokers at Intellichoice on 1300 55 10 45. We will be able to recommend a home loan mortgage product that suits your needs and circumstances. Please also use the finance calculators to get a better understanding of your borrowing capacity, loan repayments and stamp duty fees.

NON CONFORMING HOME LOAN

A non conforming home loan is ideal for people who don't meet the traditional lending criteria of a mortgage lender, for example,

• seasonal, casual, part-time or contract workers with irregular income

• new migrants with no borrowing record

• people with bad credit history or older borrowers who are about to retire

• self-employed people with little or no financials

• people with insufficient records of past savings or an inadequate deposit amount

• previously been refused finance

• people who have a large number of enquiries on their credit file

• people who are changing jobs or on probation

• starting a new business or recently started a new business

If you fall into any of the categories above, we may still be able to assist you with alternative home loan products, such as a non conforming home loan, low doc home loan or bad credit home loan.

Advantages of a non conforming home loan

• A wide range of features are available on a non conforming home loan

• Great way to rebuild a poor credit rating

• Access to a wide range of non conforming lenders who can assist you in obtaining a mortgage

Disadvantages of a non conforming home loan

• Rates are usually around 1-3% higher than a traditional home loan, but rates will depend on your level of credit impairment

• You may have to pay a hefty deferred establishment fee if you pay out the loan early

For more information about a non conforming home loan, speak to one of the mortgage brokers at Intellichoice on 1300 55 10 45 to see if this type of home loan is suitable for your circumstances. We also have access to alternative mortgage loans, including bad credit home loans and low doc home loans if you don't fit into the strict lending criteria of the mortgage lenders.

LOW DOC HOME LOAN

If you have difficulty showing documentation to demonstrate your income, or you have limited business financials, a low doc or no doc home loan might be the solution for you. A low doc home loan or no doc home loan is ideal for self employed people who have difficulty substantiating income or producing full records of their income. 

Advantages of a low doc home loan

• Less paperwork - borrower only needs to complete a simple income declaration form

• Limited or no tax returns required

• Limited or no financial reports required 

• Some low doc home loans provide up to 90% of the purchase price of the property

• Low doc home loans can be used to purchase property for investment or owner occupied purposes

• There may be some low doc home loans available with competitive interest rates

• You can choose to have a fixed rate or variable interest rate with your low doc home loan

• Many low doc home loans offer a range of features, including redraw facility, line of credit, variable or fixed rate of interest, principal and interest or interest only home loan types

Disadvantages of a low doc home loan

• Generally attracts a higher interest rate

• In some cases, a standard variable rate can be offered, but a Mortgage Insurance Fee is payable

• May require a larger deposit

Please use the home loan calculators to get a better idea on your borrowing capacity, home loan repayments and stamp duty fees. Alternatively, speak to one of the mortgage brokers at Intellichoice on 1300 55 10 45 for more information about the various home loan products available or whether a low doc home loan is suitable for your circumstances. If you don't fit into the strict lending criteria of the mortgage lenders, we do have access to alternative financial solutions, including non conforming home loans and bad credit home loans.

LINE OF CREDIT HOME LOAN

Line of credit or equity home loans allow you to borrow up to a specified limit, which is secured with a first mortgage on a residential property. These home loans provide access to funds, when required, up to the original limit set. 

Also known as a revolving line of credit, these types of home loans have become popular due to their flexibility and features. A line of credit home loan is a popular option as you are able to incorporate your savings, borrowings and investment requirements within the home loan with a line of credit attached.

Advantages of a line of credit home loan

• Most flexible type of home loan available

• You can draw down on the loan at any time up to a prearranged credit limit

• This type of home loan has no set term

• Line of credit home loans are ideal for investment purposes

• Added flexibility of a transaction account built into the home loan - it allows the borrower to access the account to meet day to day living expenses

• Use the money as you need to and pay it back when you can

• Since it is secured by residential property, the interest rate is less than the interest rates on a business loan, credit card or personal loan

• It is also a flexible way to raise funds for investment purposes by providing cash at call up to the prearranged credit limit  

Disadvantages of a line of credit home loan

• Requires discipline to ensure that over time, the principal/balance of the loan is reduced

• It is possible for undisciplined borrowers to reduce the equity they have built up in their home

• Interest rates can be higher than the other home loan types

A line of credit home loan can be used for any of the following situations:

• Purchase of shares

• Purchase an investment property using the line of credit home loan

• Renovate your existing home to add extra value

To find out more about a line of credit home loan or any of the other home loan and mortgage loans products we have available, speak to one of the mortgage brokers today on 1300 55 10 45. We will be able to recommend a home loan product that suits your needs and circumstances. Please also use the finance calculators to get an idea of your borrowing capacity.