Loans

Standard Variable Home Loans are the standard home loans that lenders supply. They are the most common type of loan approved by lenders and are usually teamed up with a Package product to give you a discounted rate and additional benefits.

A Standard Variable product has as much chance of rising as it does falling and, although the decision to follow will reside with the individual lender, the variable rate will typically rise and fall in line with the Reserve Bank of Australia announcements.

The Basic Variable Home Loan is offered as an alternative to the Standard Variable Loan.

The difference is that it does not have all the same features as a Standard Variable Loan but usually has a reduced rate for the term of the loan.

A Fixed Rate Home Loan or Investment Loan is often offered to a person who requires the certainty of fixed repayment amounts and who wants to protect themselves against possible interest rate rises.

Whilst having some benefits, Fixed Rate Loans can be restrictive, such as if you wanted to repay the loan in full under the fixed rate term there is usually a penalty, also you are limited to making extra repayments. This is due to the fact that when a customer obtains a fixed rate the lender will borrow the money over a similar period.

A Line of Credit account, sometimes called an Equity Line of Credit, allows you to combine borrowings into a revolving line of credit. The limit on the facility has no expiry date.

This type of account offers instant access to funds and applicants can draw on their Line of Credit, up to their approved limit, at any time.The minimum repayment is the interest component plus any monthly fees or charges, but you can pay the debt down as fast as you desire and leave the limit untouched until required. Some Lines of Credit can allow for capitalisation of the interest component.

It is often a feature of the loan to have the borrower's regular wage or salary deposited into the account and then use a linked Credit Card to pay for their day-to-day expenses. When the Credit Card account comes due this can be paid out of the Line of Credit but making one withdrawal, thus having the benefit of their wages working for them to reduce the interest for the entire month.

The feature of the Introductory Rate Loan, also known as Honeymoon Rate Loan, are very similar to the Standard Variable Loans. The few differences are that you cannot team the Introductory/Honeymoon Rate Loan with a lender Package. Also for the first 1-3 years, depending on the lender, the interest rate is lower than the Standard Variable Rate, however after the 1-3 year discounted rate is completed your loan will automatically switch to a Standard Variable Home Loan.

Construction Loans can be more complex as they typically need to progressively forward the loan funds to the builder, as each of the various stages of construction are completed. The lender will be required to use an 'on completion' figure when the security is valued so that there is enough equity to borrow the funds required. A licenced Builder must be contracted and a fixed price tender required as a part of the application process.

Construction Loans are offered on a Variable interest rate, but the borrower is only charged interest on the amount that the loan account has drawn for release to the builder at that point in time.

Once construction is completed, the loan can either switch to a different type of product on the borrowers' request, or it can remain on a Variable rate.

Owner Builder Construction Loans are also available with some lenders. For more details regarding Owner Builder Construction Loans please contact MIA Financial Services on (02) 6964 8567.

A Secured Personal Loan means that you will be providing the lender with security over the funds you wish to borrow. This allows the lender to offer you a lower interest rate than an unsecured loan, as the lender risk for the financier is reduced. This risk is reduced as, should the debt not be repaid, they are able to take what is offered as security to redeem their losses.

With an Unsecured Personal Loan you are not required to surrender anything for the purpose of collateral. Whilst someone may see a benefit that you will not lose anything but your Credit Rating should you fail to repay the debt, the interest rates for an Unsecured Personal Loan are much higher than those generated by a Secured Loan.