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Types of Loans

Basic Variable Loan

Basic loans usually offer variable interest rates where the interest rate charged to the borrower moves according to the market.  Basic loans usually allow borrowers to pay either fortnightly or monthly repayments and are very competitively priced.

Basic loans may not offer features such as the ability to 'split' the loan, however features such as these are rarely used by first home buyers and often increase the cost of the monthly repayment.

Fixed Rate Loan

This is where a loan is locked in at a predetermined rate for a period of time, usually 1- 5 years.  It's a great way to ensure, to the cent, what your repayments will be each and every month for the term that you have agreed to.

Line of Credit (LOC)

LOC's allow borrowers to lend against the equity in their homes.  The amount that you borrow does not need to be taken in one amount on one day.  It is a great feature to have for renovators and investors because it allows you to draw as much or as little; down against the amount you borrow at a time that is suitable for you.

Interest Only

This loan allows borrowers to pay just the interest portion of the loan for a set period of time, usually between 1-5 years.  During the interest only term the principal balance remains unchanged. At the end of the term borrowers can elect a further interest only term or revert to principal and interest loan.

Standard Variable Rate Loan

The standard variable rate loan is the most common loan structure used in Australia.  The interest rate fluctuates depending on the market and the features of the loan are generally broader than a basic loan.
Standard Loans often include features in their products such as offset accounts, the ability to repay large amounts of the loan without incurring additional fees, credit cards/debit cards attached to the account, ability to redraw additional repayments etc.

Low-deposit, 100% & Above Loans and No-deposit

These are loans that require little to no deposit.  A Low-deposit product will generally require 3%-5% of purchase price to be saved as a deposit before funds will be lent. 100% loans usually require the borrower to have enough funds to cover expenses such as stamp duty, legal fees etc and No-deposit loans usually require no deposit.

These types of loans cost more to borrowers than standard loans and are generally only available to borrowers that meet all the other requirements lenders have (such as a good credit history).

Lo-Doc or No-doc Loans

Lo-Doc/No-Doc loans - require less documentation when proving income, credit history and repayment capacity than a standard loan would.

They are often used by borrowers who are self employed, where proving income is not as easy as a person who is employed and receiving regular payslips.

They generally cost more than a standard loan and therefore should only be used where a standard loan facility is not available to the borrower.

Credit Impaired and Non-Conforming Loans

Non-Conforming loans are designed for borrowers who have slight credit impairments, financial difficulties or who are having problems getting a loan through mainstream lenders.

They generally cost more than a standard loan and therefore should only be used where a standard loan facility is not available to the borrower.

All brokers with The Lending Shop are members with MFAA - The Lending Shop is proudly operated by the Australian Loan Company Ltd.

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