All-In-One Loans are essentially a transaction account and a home loan combined. They allow you to directly credit your salary or other income to the account and then withdraw your funds via ATM, EFTPOS, linked credit card or cheque book, as you need it. The major benefit of an All-In-One Loan is that it enables you to decrease your interest charges by keeping your funds in the account for as long as possible, simply said The higher the balance in your transaction account, the less interest you have to pay on your loan. The interest rate on All-In-One Loans may be slightly higher and you may also be charged a monthly access fee.
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Borrowing Guide
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The standard variable rate offers you maximum flexibility and great features such as portability, salary account or mortgage offset you can make additional repayments when you can afford to, and redraw when you need to.
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Fixed rate loans
Fixed Rate loans are based on a set term and interest rate, anywhere from 6 months to 10 years. This provides some level of security but does not allow the reduction of repayment amounts should official interest rates fall. Once the fixed rate period is finished the rate will usually revert to a variable rate unless you decide to rollover for another fixed term. These loans can be combined with variable rate products to provide a mix of security and flexibility.
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Basic variable rate
Also known as 'no frills' loans. Basic Variable Rate loans are discount home loans with a lower variable interest rate than the standard variable rate loan. The downside of these discount loans is less flexibility and fewer features (no extra repayments can be made, no redraw, no line of credit, etc). However, you usually have the option to pay for additional flexibility and features when you need them.
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All-in-one loans
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Non-Conforming and Lo-Doc loan
Also called 'Sub-prime lending'. The less stringent documentation requirements of Non-conforming and Low Doc Loans make them a great option for persons who do not meet the standard criteria mainstream lenders use for ordinary borrowers. Examples include persons who are self-employed, have a poor credit record or who have recently arrived in Australia . Non-conforming and low-doc loans usually incur higher interest rates and generally carry a requirement for mortgage insurance, adding to their cost.
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Combination or split rate
If you are concerned about interest rates rising, but dislike the inflexibility of a fixed rate loan, you can get the best of both worlds with a Split Variable/Fixed Loan. You get the advantage of features like accelerated repayments, redraw and mortgage offset, without exposing your entire loan to fluctuations in interest rates. How you split the loan is normally up to you but 50/50 or 60/40 splits are the most common. Be aware that penalties apply if you break the fixed portion of the loan early.
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Line of Credit
Line of Credit, also known as Equity Lines or Revolving Credit, works more like a credit card and provides increased flexibility. The lender assigns you a credit limit secured against your property, and when you need cash you draw against that limit, usually by writing a cheque or using a special debit card. As you pay back the loan (the terms of repayment vary), the money becomes available to you again. Line of Credit loans usually attract a slightly higher rate of interest than a loan where the balance is continuously reducing. One of the biggest advantages of a Line of Credit is that you always have ready access to money, which makes this type of loan attractive to investors.
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Home Equity Loans
A home equity account gives you a revolving line of credit secured by the value of your house. This allows you to use the funds for other purposes such as renovating your home, investing in shares or managed funds, or financing an investment property. The interest rate is generally higher than a standard variable rate, and these loans should be treated with caution.
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