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Variable Rate Home Loans

Posted in Home-loans-perth

A variable rate home loan is a home loan where the interest rate varies when either the Reserve Bank of Australia increases or decreases the official cash rate, or the banks or lenders change them. Most banks or lenders offer discount basic variable home loans. These are generally a 'No Frills' home loan but have many great features like redraw, and the ability to pay as much towards your loan, as you can afford. Variable rate home loans are generally have a lower interest rate than other types of home loans.

Advantages

  • Generally the interest rate is lower than other types of home loans.
  • With most variable rate home loans you can pay as much off the home loan without penalty (all banks have different rules, but a good home loan has this feature).
  • With most banks, any extra you pay off the home loan, you can redraw those funds and use them if required.
  • Some banks and lenders offer an offset account, which will offset against a variable home loan.
  • With most banks, variable rate home loans can be packaged under a banks professional package, saving you fees, and some banks offer a cheaper variable interest rate under their professional package.

Disadvantages

  • The interest rate can go up.
  • It is may be hard to set a household budget when your not sure what your home loan repayments may be in the future.

General Variable Interest Rate Home Loan Fees

  • An application fee may apply to your variable rate home loan.
  • Your Variable rate home loan may have a monthly fee.
  • If your loan is greater than 80% of the property value, you will pay a once off mortgage insurance fee.

Loan Term And Repayment Types

  • Home loan terms from 5 to 40 years (Depending on the bank or lenders credit policy)
  • Principle and interest repayments are available.
  • Interest only repayments may be available.

If you would like some more information on variable rate home loans, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.

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Fixed Rate Home Loans

Posted in Home-loans-perth

A fixed rate home loan is a loan that is fixed at a certain rate for a period of time. Generally speaking most banks offer fixed rate home loans over 1,2,3,4 and 5 years. Some lenders offer 7,10 and 15 year fixed rate home loans. With a fixed rate home loan, generally after the fixed rate period ends, your home loan will revert to the standard variable. You can re fix your home loan again, at that stage, but the bank or lender may charge a loan modification fee.

Advantages

  • You have a guaranteed interest rate for the period of the fixed rate term.
  • You may be able to manage your budget better knowing your repayments for the fixed rate home loan term.
  • With most banks, fixed rate home loans can be packaged under a banks professional package, saving you fees, and some banks offer a cheaper fixed interest rate under their professional package.

Disadvantages

  • With most fixed rate home loans you are limited how much extra you can pay off your loan during the fixed rate period.
  • Fixed rate home loans can be expensive if you pay out your home loan during the fixed rate term (eg. Sell your home)
  • Most fixed rate home loans don't have the ability to have an offset account.

General Fixed Rate Home Loan Fees

  • An application fee may apply to your fixed rate home loan.
  • Your fixed rate home loan may have a monthly fee.
  • Rate Lock Fee - The interest rate you have on a fixed rate home loan is the rate on the settlement day of your loan. Banks offer a rate lock facility, which guarantees the interest rate on the day of application. This fee is generally paid up front, and is around 0.15 to 0.2% of the fixed rate loan amount.
  • If your loan is greater than 80% of the property value, you will pay a once off mortgage insurance fee.

Loan Term And Repayment Types

  • Home loan terms from 5 to 40 years (Depending on the bank or lenders credit policy)
  • Principle and interest repayments are available.
  • Interest only repayments may be available.

If you would like some more information on fixed rate home loans, contact Perth Mortgage Broker Group, or call Troy on 0411 229 602, 7 days a week.

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Line Of Credit

Posted in Home-loans-perth

A Line of credit is a home loan that is more like a credit facility. With this type of home loan you have a credit limit, and if you owe nothing, you pay nothing that month. If you owe $10,000, your repayment that month will be the interest charge on $10,000.

Lets look at a couple of example to see how a line of credit works. Lets assume the credit limit is $100,000. If you owe $10,000 your will pay monthly repayments will be interest charges on $10,000 and you will have $90,000 of available credit. If you have spent some more money, on a car for example, and now owe $40,000 on your line of credit, your monthly repayment will be the interest charge on $40,000, and have $60,000 available credit. A really handy facility.

A real advantage to a line of credit is that you can have a balance of $0, and the limit remains for the life of the home loan. Alot of investors, share traders like this facility, as its handy to have that available credit should they want to invest. A line of credit is a great tool for people who like to have a cheap credit facility available should they choose to use it.

A line of credit generally has a variable interest, although a few banks or lenders offer a fixed rate line of credit. The interest rate on a line of credit is generally a little higher than a standard variable rate home loan, but generally only 0.2% to 0.5% higher.

Advantages

  • Can have a zero balance and the facility remains open.
  • Great for investors, share traders and people who like to have credit available should they need it.
  • Much cheaper than a credit card.
  • You may be able to package your line of credit under a banks or lenders professional package, saving on application and monthly fees, plus you may get an interest rate discount.
  • You may be able to direct credit your salary directly into your line of credit, which saves you interest.

Disadvantages

  • The interest rate can go up on a variable line of credit
  • The interest rate is generally a little higher than a standard variable loan
  • Because the funds are so easily accessible, it is easy to spend large amounts of money and reach your credit limit.

General Line Of Credit Home Loan Fees

  • There may be an application fee on a line of credit.
  • There may be a monthly or annual fee on a line of credit.
  • If your loan is greater than 80% of the property value, you will pay a once off mortgage insurance fee.

Loan Term And Repayment Types

  • Home loan terms from 5 to 30 years (Depending on the bank or lenders credit policy)
  • Minimum repayments on a line of credit are generally interest payments. The great advantage is, you can pay as much as you want, and have those extra funds available, if you need them.

If you would like some more information on line of credit home loans, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.

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Offset Account Home Loans

Posted in Home-loans-perth

An offset account home loan generally has a savings account in which the balance of the savings account directly offsets against the balance of the home loan. For example if you have a home loan of $100,000 and you have a balance of $10,000 in your savings/offset account, the interest charged on the home loan would be the balance of $90,000 ($100,000 Home loan minus $10,000 in the savings/offset account). If you had $40,000 in the offset account, you would be charged interest on $60,000. Interest on home loans is generally calculated daily, so the interest charged on the home loan is the home loan itself ($100,000 in our example) minus the average daily balance of the offset account. This is a great way to save interest, on your home loan, as an offset account is generally a savings account, and can be used as your day to day transaction account, with a debit card, bpay etc.

 Advantages

  • A great way to save money.
  • With most banks, an offset account home loan can be packaged under a banks professional package, saving on fees and offering a discount interest rate on your home loan.

Disadvantages

  • With most banks offset accounts only work against variable rate loans, although some banks or lenders do offer offset accounts against fixed rate home loans, but most are only a partial offset against the fixed rate home loan.

General Offset Account Home Loan Fees

  • There may be an application fee.
  • There may be a monthly or annual fee on an offset account home loan.
  • If your loan is greater than 80% of the property value, you will pay a once off mortgage insurance fee.
  • There may be a monthly fee on the transactional offset account.

Loan Term And Repayment Types

  • Home loan terms from 5 to 30 years (Depending on the bank or lenders credit policy)
  • Principle and interest repayments are available.
  • Interest only repayments may be available.

If you would like some more information on offset account home loans, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.

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