Stardard Loans
Advanced Wealth Finance can provide you with your financial solutions from most of the major banks and lending institutions in Australia. Below is information which will assist you in choosing the right loan.
Choosing the Right Mortgage
Variable Interest Rate
The rate is set by the Reserve Bank. The main benefit is that if there is a lowering of interest rates, your repayments go down. But, if the rates rise, then your repayments go up.
Fixed Interest Rate
Most lenders set the interest rate for a period between 1 and 5 years although a few offer longer periods. Benefits include, knowing what your repayments will be during the period they are fixed, easier to budget your finances. Disadvantages are that if the interest rates go down you will still be paying at the higher rate. If you wish to change to a variable rate or to change lenders the ‘break costs’ can be extremely high.
Interest Rate
The cheapest interest rate may not be what it seems. There may be extra charges added on to the loan which can increase the amount you are actually paying. We will supply you with a comparison rate schedule which will show you exactly what you are paying for.
Honeymoon or Discount Interest Rate
This is usually for the first year of the loan. Some lenders offer you a greatly reduced interest period to get you in to their loan. However, the disadvantages are the remaining term goes to the standard variable rate after the initial honeymoon period and they usually come with added fees and high break costs.
Loan to Value Ratio (LVR)
This is the amount of the loan compared to the value (or purchase price) of the property. Most lenders will lend up to 95% LVR on full documented loans. If the LVR is 80% or less then you do not pay Loan Mortgage Insurance (LMI). If your LVR is more than 80% then you pay LMI on the full loan amount, not just the percentage you are over. On low doc loans, the LVR is lower for both the amount they will lend and the level when LMI becomes payable.