Standard Variable Rate
The standard loan product. Variable Rates increase/decrease in line with Reserve Bank cash rates. This product allows you to make unlimited extra repayments and usually carries no penalties for early payout. Other options usually included are weekly/fortnightly repayments and redraw facilities.
Professional Packages
Most lenders have professional packages that provide tiered discounts off the Standard Variable Rate. Generally, if you borrow more than $250000, you will receive .7% discount of the SVR. These usually entail an Annual Fee in lieu of Application & Monthly fees.
Introductory Rate
Better known as Honeymoon Rates, most Lenders offer a discounted variable or fixed interest rate for the first 12 months of your loan. The loan converts to the Standard Variable Rate at the end of this term. Some Lenders will allow you to switch to another Product at the end of the term however a Switch Fee may be payable.
Limitations may apply to extra repayments. In addition, a Discharge/Deferred Establishment Fee may apply if you discharge the loan within a certain period, usually the 1st 3 years.
Basic Variable Rate
The Basic Variable Rate is set at a predetermined margin below the Standard Variable Rate, usually 0.5-0.6%. This product allows you to make unlimited extra repayments and other options usually included are weekly/fortnightly repayments and redraw facilities.
Fixed Rate
Fixed Rates are available for terms of 1 - 5 years. Usually, a limitation will apply as to the amount of extra repayments you can make during the fixed term. You may also incur a Discharge/Early Repayment fee should you payout your loan before the expiration of your Fixed Rate term.
100% Offset
100% Offset Accounts are linked to your mortgage and operate as a standard transaction account. The daily balance of your savings account is deducted from the balance of your mortgage and you are charged interest on the remainder. This means that if your loan balance is $100000, and you have $10000 in your Offset Account, you will be charged interest on $90000.
100% Offset Accounts are usually only linked to Variable Rate products.
Line of Credit
Similar concept to the 100% Offset Account except your mortgage also acts as your savings account. Lenders will set your credit limit to 80% of the value of your property however some Lenders will allow the limit to be set at 90% of the value.
A strong financial discipline is required for this type of product. Essentially, you do all your regular spending on an interest free credit card, deposit all your income and savings into your Line of Credit, and then clear your credit card on each statement date. Because you are charged interest on the daily balance, the more monies you have deposited into your mortgage, the less interest you pay.
This product is ideal for Self Employed applicants and Investors where there is regular turnover of larger amounts of cash.
LO / NO Doc
Low Doc products are specifically designed for self-employed applicants who are unable to provide the relevant documented Financials.
Few Lenders offer a 'true' Low Doc product since the GFC. In addition to the minimum deposit of 20%, most Lenders now require 4 consecutive quarters of BAS.
Traditional Low Doc is still available from very few Lenders however you must have an ABN registered for a minimum of 2 years and depending on income declared, be registered for GST. Lenders still offering this are charging an interest rate that is slightly higher than the Standard Variable Rate.
In all cases, Lenders Mortgage Insurance will be payable on all low doc lending that is between 60-80% LVR, and 'cash out' caps/restrictions apply.
In some cases where the LVR is <60% LVR, the restrictions on ABN, BAS and cash out are eased.
Interest Only
Ideal for properties purchased for Investment purposes. Your minimum monthly repayment is equivalent to the interest charged on your loan ie there are no principal reductions.
Interest Only terms are usually for a maximum period of 5 years. At the end of this period, the loan may convert to a principle & interest loan or be renegotiated completely, depending on the Lender.
Construction
Construction loans are provided by most Lenders. Usually while constructing, the Standard Variable Rate is the only product available. However, on the completion of construction, you may have the option of switching to any product. Repayments while constructing are on an Interest Only basis. Your full repayment commences once Final Drawdown has been completed. Please note that some Lenders will allow construction on selected Products other than the Standard Variable Rate.
Credit Impairment
These products are available to assist people who have had defaults or an unsatisfactory credit history and are unable to obtain finance through the standard Lenders. Interest rates & fees vary and may depend on your credit history.