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Blog

April 30th, 2013
Typical Loan Features

One size doesn’t fit all when it comes to home loans. Make sure you choose a loan with the features and benefits that are right for you.

At PFG our mortgage consultant Carlo Cappello can recommend a loan for your particular needs – and take care of all the paperwork.

Carlo can give you an idea of how much you may be able to borrow and what your likely repayments may be. When you’re ready, call our office and talk to Carlo to discuss next the steps.

Here’s a guide to common loan features and benefits.

Interest only repayments

You only pay the interest on the loan, not the principal, usually for the first one to five years although some lenders offer longer terms. Many lenders give borrowers the option of a further interest-only period. Because you’re not paying off the principal, your monthly repayments are lower. These loans are especially popular with investors who pay off the principal when the property is sold, having achieved capital growth.

Extra repayments

If you pay more than the required regular repayment, the extra amount is deducted from the principal. This not only reduces the amount you owe but lowers the amount of interest you repay. Making extra repayments regularly, even small ones, is the best way to pay off your home loan quicker and save on interest charges.

Weekly or fortnightly repayments

Instead of a regular monthly repayment, you pay off your home loan weekly or fortnightly. This can suit people who are paid on a weekly or fortnightly basis, and will save you money because you end up making more payments in a year, cutting the life of the loan.

Redraw facility

This allows you to access any extra repayments you have made. Knowing you have access to funds can provide peace of mind. Be aware lenders may charge a redraw fee and have a minimum redraw amount.

Repayment holiday

You can take a complete break from repayments, or make reduced repayments, for an agreed period of time. This can be useful for travel, maternity leave or a career change.

Offset account

This is a savings account linked to your home loan. Any money paid into the savings account is deducted from the balance of your home loan before interest is calculated. The more money you save, the lower your regular home loan repayments. You can access your savings in the usual way, by EFTPOS and ATMs. This is a great way to reduce your loan interest, as well as eliminate the tax bill on your savings. Lenders provide partial as well as 100% offset accounts. Be aware the account may have higher monthly fees or require a
minimum balance.

Direct debit

Your lender automatically draws repayments from a chosen bank account. Apart from ensuring there is enough cash in the account, you don’t have to worry about making repayments.

All in one home loan

This combines a home loan with a cheque, savings and credit card account. You can have your salary paid into it directly. By keeping cash in the account for as long as possible each month you can reduce the principal and interest charges. Used with discipline, the all-in-one feature offers both flexibility and interest savings. Interest rates charged to these loans can be higher.

Professional package

Home loans over a certain value are offered at a discounted rate, combined with discounted fees on other banking services. These can be attractively priced, but if you don’t use the banking services you may be better off with a basic variable loan.

Portable loans

If you sell your current property and buy somewhere else you can take your home loan with you. This can save time and set-up fees, but you may incur other charges.

Some banks charge for these services and each have their own rates so speak to Carlo today to ensure you get the best deal for you.

Source: http://www.afgonline.com.au/buyingahome-loanfeatures.html

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We are confident that we will continue to receive excellent advice and services from PFG and have not hesitated recommending them to our families and friends.

Anna Hristodoulakis and Milorad Lazic

Accredited by AMP Financial Planning
PFG Financial Services Pty Ltd ABN 23 052 977 189 and PFG Global Pty Ltd ABN 50 679 416 839 trading as PFG Financial Services (Global) are Corporate Authorised Representatives and Credit Representatives of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706. For further details including financial services we can offer you and how we are renumerated, please read the Financial Services & Credit Guide V 4.1 & FPFG Global Pty Ltd Financial Services & Credit Guide V 4.0 General Advice Warning: This website contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.