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RESIDENTIAL LOANS

Your dream home...

There are many advantages to owning your own home such as building equity for yourself and not a landlord, and having the freedom to improve your home to suit your needs.

 

Deciding where and when to buy your first or next home is a big decision and there are many factors that need to be considered.  Location, future needs, budget, new build or existing, community and so on.

 

With such a large investment, getting your finance correct from the start is equally as important as the house itself.  To find out your borrowing capacity and arrange a pre-approval, talk to Epyon Finance Brokers to help you with your next move.

Considerations

A Fixed interest rate remains the same for a set period of time.  This makes it easier to budget, but does have the risk that you could be paying a higher rate if interest rates go down.

A Variable interest rate can go up or down depending upon the lending market.  This makes it harder to budget as your repayments may change from month to month, but you do have more flexibility to switch loans and lenders as your rate is not locked in.

An alternative is to Split or partially fix your loan, to have a portion on a fixed rate, and the rest on a variable rate.

 

A Principal and Interest loan means you make regular repayments on the amount borrowed (the principal) and interest is charged on that amount as well.

With an Interest only loan, you are only charged the interest and not the principal.  Although the repayments are lower, since the principal is not being repaid, the overall debt is not reduced.

 

An Offset account is where you link a savings account to your home loan and the balance is working to reduce your home loan repayments.  For example, if you deposit your salary into the offset account and you have a balance of $20,000, and a home loan of $300,000, you will only pay interest on the amount of $280,000.

A Redraw facility allows you to withdraw extra money you have paid towards your home loan.  This can be of an advantage if you prefer to pay more than your minimum repayments each month.

A Line of Credit is when a single account is used for your home loan and everyday spending and has a pre-approved limit.  You only pay interest on the amount spent.  This needs to be handled carefully to ensure your spending isn’t leading you into further debt.

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