Loan Types

First home owner loan

  • Sometimes Lenders have specials for first home loan seekers, otherwise, the loan products are the same for everyone. 
  • Some loans have higher loan to value ratio's (LVR) so that first home owners can borrow more if they do not have a large deposit.
  • Lenders expect to see at least 3%-5% deposit through genuine savings
  • Some Lenders have a discount on the Lenders Mortgage Insurance (LMI) premium for first home owners

Investment Loan

  • property - investment loans to purchase real estate property (houses, units, land)
  • shares & managed funds and other  - you can raise a loan against your home to invest in a share portfolio or managed funds provided you have sufficient equity in your home.  Some Lenders like to see a proposal from a Financial Planner before they will release the funds.

Construction

  • Building a new home on land that you have bought or own already or through purchasing a house and land package.  Ofen the land will settle first and then construction begins.
  • You generally need the 5% deposit to pay the Builder on commencement of construction
  • Consturction loans generally are paid by progress payments (5) as set out in your building contract

Land loan 

  • A loan against vacant land.  Some Lenders like to know that you are going to build on the land within a certain amount of time, others are not bothered.

Off-the-plan loan

  • The purchase of a property having seen the plans only, as construction has not yet begun or not yet completed. 
  • A deposit is usually required and can sometimes be a negotiated figure(10%, 5%).
  • A deposit bond is often used as the construction period may be extended and you may not want to tie up your money.  Not everyone accepts deposit bonds.

Renovation loan

  • Usually a loan increase to renovate your home in some way.  So long as there is no construction or structural changes, the funds are provided in a lump sum for you to manage (unlike a constrcution loan with progress payments which the Lender manages)

Low document loan (low doc) 

  • A loan for self employed people who do not have up to date financials.  In more recent times, polices have changed around dow doc loans and Lenders now want to see 12 months BAS statements or 6 months trading account statements or an Accountants acknowlegement.

Non-conforming loan

  • Loans for people who have credit issues - discharged bankrupts, judgement, defaults etc.
  • Specialist Lenders who will give borrowers another financial chance.
  • Interest rates and fees generally higher due to being more risky

Reverse Mortgage 

  • A loan available for people over 60 years who wish to generate some cash from their home. 
  • The loan does not have to be paid back as interest is capitalised on top of the loan
  • Repayment occurs when either the loan is refinanced, the borrower passes away or the loan is repaid
  • Can be for any worthwhile purpose

Self Managed Super Fund (SMSF) loan 

  • Provides a loan so that a Superannuation Fund can own a property.
  • There are strict conditions applied, such as LVR levels and trusts need to be set up

Commercial loans

  •  A loan for a property such as an office, shop, more than 3 unit developments, factory, industrial land etc
  • Usually a higher interest rate than a residental loan
  • Different Lender assessment and affordability tests generally applied

Leasing 

  • Usually associated with Plant and Equipment loans for commercial purposes, eg Chattel Mortgage, High Purchase etc.

 Deposit Bond

  • An insurance policy that guarantees that at settlement of your property, the deposit will be paid if you default on paying the deposit. 
  • Popular with off the plan purchases and constructions where there may be an extended period before building completed.  Frees up your funds rahter than having them tied up as a deposit.
  • A deposit bond is an assurance for the Vendor and does not take you off the hook as being liable for the deposit when due
  • If you default, the deposit would be paid by the insurance company and the insurance company would then chase you for the funds

 Asset Lending

This type of loan is a short term loan secured by your home or commercial property, but the loan can only be for business or investment purposes.  The interest rates are much higher than regular property loans and there are fees attached.  Sometimes this can be a much needed solution for a short term requirement.