• Principal and interest loans
  A loan in which both the principal and the interest are paid during the term of the loan. These can be either variable or fixed rates. Payments are set on the basis of having the loan repaid within a set time frame. As each payment is made, part of the payment pays the interest and part pays the principle. Therefore with each payment you are reducing the amount owed and hence your interest charge lessens as well.
  

• Interest only loans
  A loan in which only the interest accruing each month is paid. The principle (the balance) does not decrease as you are only paying the interest and nothing off the principle. Interest only loans can be either fixed or variable and taken for a period of 1 - 5 years. After this time you must revert to Principle and Interest.
  Most lenders will only allow interest only loans for investment purposes.

• Equity loans
  A loan that operates like a line of credit. They can operate as either principle and interest or interest only. They often have Debit or Credit Card and cheque book facilities. They allow you to have all of your income credited directly to the loan, thus helping you to reduce your loan quicker. Beware, that this type of loan requires self control, otherwise it is easy to re-spend what you have already paid off. Thus not reducing your loan and not saving you money.
  

• Mortgage set-off accounts
  A set off account is a savings account connected to your loan account, which allows the balance in your savings account to reduce the interest charged to your loan account.
  Eg:
  1. Loan balance $100,000, savings account balance $12,000, interest charged on your loan account is calculated on $88,000.
  2. Loan balance $100,000, savings account balance $55, interest charged on your loan account is calculated on $99,945.
  These accounts are normally easier to manage than line of credit accounts as you must always make the regular payment required on your loan. Usually the balance in your savings account is fully set off against your loan balance. The savings account operates as your normal savings account with card and cheque book access.
  * Loans to purchase vacant land
  You can obtain money to purchase a vacant block of residential land. However, the lender will usually require you to commence building on that land within 12 months from the time of purchase. Therefore you must also show that you can afford to build your new house before they will lend you the money to buy the land. Usually the maximum amount for a land loan is 90% of the purchase price.

• Construction & Renovation loans
  Construction loans are available through the majority of lenders, which all have slightly different criteria. If you owe money on the land on which you wish to build, the construction loan will normally have to be obtained from the same lender or a new loan to refinance the first lender can be included in your new construction loan.
  We are able to arrange for you, a pre-approval to confirm that you will be able to borrow the required funds before you outlay money on designs and Council applications. But final approval and funding of the loan will require you to have a fixed price building contract, from a licensed builder, Council approved plans and building/development application approval.
  Beware that very few lenders will lend to owner builders.

• Investment Loans
  You can borrow to purchase investment products, such as shares and property. You will need to already have equity in a real estate property to allow to purchase an investment.

Eg 1:
Value of current property $300,000
Current mortgage $100,000
Value of new property $250,000
Investment loan $260,000 (Incl. purchase costs)
Total Assets $550,000
Total Loans $360,000

Loan to Value Ratio (LVR) 65.5%

Eg 2:
Value of current property $300,000
Current mortgage $100,000
Investment loan $100,000 (to purchase shares)
Total Assets $300,000
Total Loans $200,000

Loan to Value Ratio (LVR) 66.6%

As you can see from the 2 examples above, you can borrow higher amounts to purchase property compared to purchasing shares or equities.
When purchasing investments, the lenders will take into account income to be derived from the investment that is being purchased. They will take up to 80% of rental receipts on property but usually only 50% of dividends or interest.
Depending on the loan amount, you may be able to borrow up to 90% LVR, but this may vary depending on individual circumstances.

• Consolidating your loans
  The days of having a different loan for everything is gone. Lenders will now allow you to consolidate your loans into one easier to manage loan, however lenders will be worried if you have more then 4 or 5 loans to refinance. These loans could be credit cards, personal loans, an overdraft or housing loans.
  When your loans are consolidated into one loan it takes a lot of hassle out of managing your money.
  When loans are consolidated it is usually a good time to get rid of your excess/unwanted credit cards.
  Lenders will want to see up-to-date statements on all your loans and credit cards to see if you are meeting your current commitments.

• Redraw facilities
  A redraw facility allows you to withdraw any amounts that you have paid on your loan, which are in excess of the minimum required repayments. Usually there is a minimum amount that must be available in the redraw amount before you are able to withdraw it. The minimum amount varies depending on the lender.