Home andInvestment Loans

B U Y I N G P R O P E R T Y - WE A T H E R I T B E Y O U R OWN H OM EO R I N V E S T M E N T I S O N E O F T H E B I G G E S T D E C I S I O N S

Y O U W I L L E V E R M A K E

E D G E S P E C I A L I S T A D V I C E N E T W O R K

H O M E A N D I N V E S T M E N TL O A N S        

P A G E 1

Table of Contents

Home and Investment Loans     

Buying a property - whether it be your own home or an

investment property is one of the biggest decisions you will

ever make . There are many aspects of property loans that

you need to be aware of . 

Listed below is a breakdown of the different types of home

loans available to borrowers :

Loan Types - 2

Pre-Approval - 3

Purchases - 4

Refinances - 4

H O M E A N D I N V E S T M E N TL O A N S      

P A G E 2

Home and Investment Loans   

Most people take out a principal and interest

home loan , where you make reqular payments

against the principal (the amount borrowed) as

well as paying interest . This type of loan is

designed to be repaid in full over the life of the

loan .

P R I N C I P A L A N D I N T E R E S T  

I N T E R E S T O N L Y    

As the name suggests , your repayment amount

will only cover the interest on this loan . The

principal amount you borrowed will not reduce

unless you choose to make extra repayments .

Paying interest only may cost you more over

the term of the loan because you 're paying

interest on a principal that doesn 't reduce . 

F I X E D

Fixed rate loans lock in your interest  rate for a

period of between 1 and 7 years . The biggest

draw card of choosing a fixed rate loan is your

repayments will remain consistent during the

fixed term , which makes this type of home loan

popular for first home buyers or those on a

strict budget . 

V A R I A B L E

This is the most popular type of home loan in

Australia . The interest rate you pay many vary in

line with movements in market interest rates ,

so you can expect the repayments to vary (up &

down) over the course of the home loan . 

S P L I T R A T E

Many lenders will let you fix one part of your

home loan , while the remaining portion has a

variable rate . This can give you the best of both

worlds - some protection from rising rates

through still with the ability to benefit from any

rate cuts . 

O F F S E T

This is a savings or transaction account linked

to your home loan . Your account balance is

taken off the amount you owe on your home

loan , reducing the amount of interest you pay .

For example , if you have a home loan of

$500 ,000 and a balance of $20 ,000 in your

offset account , you only pay interest on

$480 ,000

R E D R A W

Having a redraw facility allows you to pay extra

money into your loan that you can take out (or

redraw) later if you need it .

The extra money you pay into the loan reduces

your loan balance which reduces the interest

you pay . Your loan balance will still reduce

each month according to the terms of your

loan . 

P A C K A G E

A package home loan , sometimes called an 'on

going discount ' home loan , combines a home

loan with other financial products - usually a

transaction account and/or credit card . 

H O M E A N D I N V E S T M E N TL O A N S      

P A G E 3

Home and Investment Loans  

These are home loans designed for self-

employed people who don 't have all the

financial documents providing proof of income

normally required to secure a home loan . A

low-doc loan can be either fixed or variable

through the rate is generally higher than for a 

standard variable or fixed home loan . 

L O W - D O C Get legal representation - It 's a good idea to

get a legal rep to arrange the whole property

transfer process . While this contract is usually

prepared by the seller 's solicitor , your legal rep

should check the details and make sure zoning ,

heritage or title restrictions don 't clash with

your intended use of the property  They should

also check that the property rates and taxes are

paid up , that the seller is actually entitled to

sell the property and assist you with organising

property inspections (such as building and

pest).

Prepare for settlement - This is when you need

to organise your finance and take out insurance

on your purchasing property . Settlement of the

property is when the balance of the purchase

price is paid , the keys are handed to you and

your lender will receive the transfer document

and title deed . 

R E F I N A N C E S

P R E - A P P R O V A L S

A loan pre-approval is an estimation of your

borrowing capacity based on your current

financial positions . It give you an idea of how

much you can borrow based on your income ,

spending , assets and liabilities .

After the pre-approval assessment , the lender

determines the possible loan amount as per

your application .

- You know your maximum purchase price

- You know that your personal situation meets

their lending criteria

- Your pre-approval is valid for 3-6 months  

P U R C H A S E S

So you 've found your property and agreed on a

price with the sweller . What 's next?

Exchange Contracts - The first important paper

to be shuffled is the contrac of sale . Neither

you nor the seller is legally bound to go ahead

with the sale until a written , signed contact is

exchanged .

 

Refinancing your home loan can provide a

valuable opportunity to save money , access

improved loan features or tap into home

equity . But it 's a big step and it 's worth

knowing what 's involved   

- Your current interest rate is no longer

competitive

- A major change has occurred in your financial

situation

- You 're looking for money to pay for something

such as a home renovation , child 's education or

another property investment . 

- You want to switch to a fixed rate at an

opportune time 

- You want to consolidate your other debts . 

Features of Pre-Approvals 

 

When does it makes sense to refinances?

H O M E A N D I N V E S T M E N TL O A N S    

P A G E 4

Home and Investment Loans  

- You do not plan on owning the property for

much longer

- You have a locked in loan such as a fixed

interest rate loan that will involve high fees to

break

- Your credit history has taken a hit due to

outstanding debts

- You don 't have a reliable source of income . 

When it does NOT make sense to refinance?

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