Home and Investment Loans
Wealth Managers Australia has access to a large range of financial institutions, ensuring our clients always have the best possible options when choosing a home loan or an investment property loan.
Taking out a mortgage can be both exciting and nerve-wracking. It is a serious commitment and there are a lot of factors to consider before deciding on what loan suits you best.
The team at Wealth Managers Australia can provide you with detailed information and explain some of the home loan options that may be available.
Need help choosing the right loan to suit your circumstances? Contact us today for a consultation with one of our experts.
Home Loan Options
Interest Only Loans
Interest only loans are a popular option for investment properties as they could allow you to claim higher tax deductions. During an interest only period, your monthly repayments equal the interest charged that month.
Fixed Rates
A fixed rate loan will give you the benefit of knowing what your loan repayments will be for the whole fixed rate term. For variable rate loans, the loan repayments could change with changes to the interest rate.
Offset Accounts
An offset account is an everyday bank account that’s linked to your home loan. You can deposit your salary and savings into the account and the balance is then offset against the amount owing on your home loan saving you interest.
SMSF Loans
The difference between a SMSF and other types of funds is that members of an SMSF are usually also the trustees. This means the members of the SMSF run it for their benefit and are responsible for complying with the super and tax laws.
Refinancing
Refinancing is the process of taking out a new mortgage to repay an existing loan, often because there has been a change in your personal or financial situation, or simply because you want a better deal on your home loan.
Interest Only Loans
You may be able to choose to make interest only repayments for a specific period. This means you’re only paying interest charged and your repayments during that period will be lower than principal and interest repayments. During an interest only period, your monthly repayments equal the interest charged that month. At the end of an interest only period, most loans revert to principal and interest repayments to ensure the loan is repaid in full over the remaining term.
You need to consider your financial situation to plan for the end of your interest only period. Wen you switch from interest only to principal and interest repayments your repayment amount will be higher than the principal and interest repayments if spread over the full loan term. Interest only loans are a popular option for investment properties as they could allow you to claim higher tax deductions for your investment property.
Speak with one of our consultants to help find the right loan option for your individual circumstances.
Offset accounts
An offset account is an everyday bank account that’s linked to your home loan. You can deposit your salary and savings into the account and the balance is then offset against the amount owing on your home loan saving you interest.
For most offset accounts, the lenders will calculate interest on the loan account for a day after deducting the balance of the offset account from the loan balance that day. One of the benefits of an offset account is you can use funds in your offset account any time. However each time you use those funds, you reduce the balance of your offset account and reduce the interest you save on your linked loan account.
Sometimes, offset accounts are offered only with variable rate home loans that have a higher interest rate or with loans that have multiple features. This may mean you have to pay extra in banking fees and charges for the loan, which can reduce the savings you make using an offset facility.
If you cannot retain a reasonable amount of cash in your offset account, the interest you save with an offset account could be less than the benefit of taking out a loan without an offset account, but with a lower interest rate.
Use our Offset Calculator to calculate the interest you could save.
Fixed Rates
A fixed rate loan will give you the benefit of knowing what your loan repayments will be for the whole fixed rate term. For variable rate loans, the loan repayments could change with changes to the interest rate. By choosing a fixed rate term, you may lock in an interest rate that is lower than the then current variable rate available on the loan. But if the variable rates fall below the fixed rate on your loan during the fixed rate term, you may miss out on the benefit you had initially with a lower fixed rate.
On the other hand, you may be better off if variable rates rise above the fixed rate on your loan during the fixed rate term. For a lot of fixed rate loans, you are not able to make extra payments or may be restricted by the total amount of extra repayments you can make on your loan. If you repay the loan before the end of the fixed rate period, you may be liable for break costs. Fixed rate break costs can be high and will increase the amount you owe the lender.
Before fixing all or part of your loan, consider whether you intend to sell your property; make extra principal repayments; or change your lender during the fixed rate term.
If you are still confused, contact us today for a consultation with one of our experts.
SMSF Loans
Self-managed super funds (SMSFs) are a way of saving for your retirement. The difference between a SMSF and other types of funds is that the members of an SMSF are usually also the trustees.
This means the members of the SMSF run it for their benefit and are responsible for complying with the super and tax laws. We have access to various financial institutes that can assist with borrowing funds and leverage your wealth building strategies.
Refinancing
Refinancing is the process of taking out a new mortgage to replace an existing loan often to get a lower interest rate or additional features and add-ons such as an offset account, redraw facility or flexible payments. While refinancing can be with the same lender, it often involves switching to another bank.
Other reasons to refinance can be to use the equity in your home to purchase an investment property or consolidate debts such as a personal loan, car loan or credit card into your mortgage so it’s easier to manage your finances.
Use the home loan comparison tool to help assess if the benefits outweigh the costs.
