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Breakfree Financial Services helps customers to find the best home loan suited to their circumstances. We realise that our clients have different needs, so we customise a loan package that will suit them. We offer a wide range of home loans, with over 25 lenders to choose from, including:
Standard Variable Rate Loan
As the name implies the interest rate charged on these loans may move up and down. The rates usually move in line with the Reserve Banks official interest rates. The Reserve Bank board meets on a monthly basis and determines the need to move the interest rate or to maintain them at their current level. This is usually econemy driven.
Fixed Rate Loan
As the name implied the interest rate charged on these loans is fixed for the term of the contractual period. This is usually set from one year to ten years. The borrower will nominate the fixed rate period at the beggining of the contract and if the borrower should break the contract period fees will usually be incurred for doing so. At the end of the fixed rate period, the borower will have the option for refixing a new term (at the discretion of the lender) or the outstanding balance would be transferred to a standard variable rate.
Line Of Credit
A Line of Credit can provide the borrower with the benefit of accessing the equity in their own home or investment properties at any time for any worthwhile purpose. A Line of credit has similarities to an overdraft facility in that available funds can be withdrawn from the facility back up to the original approved limit at anytime. Interest rates on Line of Credit facilities are usually variable that fluctuates within the market. The borrower can generally access the available funds in their Line of Credit account via a Credit Card, Cheque Book, ATM, Internet or Phone Banking. A Line of Credit facility provides the borrower with easy access their equity ensuring peace of mind in times of need.
Investment Property Finance
Investment property finance is very much the same as residential mortgages offering the same types of loans (standard variable, fixed rate and line of credit) but in being that the sole purpose of the loan is for investment the loan is not covered under the Uniform Consumer Credit Code (UCCC) ie. It is UNREGULATED.
First Home Buyers
The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant of up to $7000 is payable to first home owners that satisfy all the eligibility criteria. For more information visit: http://www.firsthome.gov.au/
Equity Release Loans
An Equity Finance Mortgage (EFM) is a new type of home loan that can help you to:
- Reduce the upfront and ongoing costs of purchasing a new property; or
- Reduce your current monthly mortgage repayments (via a refinancing of your existing loan); or
- Buy a more expensive property than you may otherwise be able to afford.
An EFM works in conjunction with a traditional home loan. Together they let you move some of the expense of a traditional home loan to later when you eventually sell your property. Here's how:
- An EFM allows you to borrow up to 20% of a property's value;
- There is no annual percentage rate applicable to an EFM loan, unless you are in default;
- You are not required to make any regular monthly interest repayments throughout the EFM loan, which you can hold for 25 years.
Instead, when you sell the property or repay the EFM for some other reason, you repay the EFM amount you originally borrowed plus up to a 40% share of any increase in the value of the property.
Construction Loans, Including Owner Builder
A Construction Loan is for people who are building a new home, although some lenders also provide the same type of loan for renovations.
In each case the loan funds are drawn down in stages as the builder reaches agreed construction milestones. The lender uses an independent expert to monitor the construction process and only makes progress payments when the builder has reached certain objectives and met satisfactory standards.
Most lenders only require interest payments on the loan during the construction phase. After completion the loan becomes a standard variable rate loan. In some cases it becomes a fixed interest loan.
A construction loan helps to minimise your mortgage repayments until the new home is completed, takes control over payments to the builder, and and reverts to a normal loan on completion of construction.
Bridging Finance
Bridging Finance is the same as Residential mortgage inly that it is used as a short term solution to enable the borrower to purchase or construct a new home before the settlement takes place on their current home. They are often referred to as “home to home” loans. This type of loan is usually sought after by borrowers who are purchasing a new home or building a home, to enable them to stay in their current property until the new one has settled or been constructed. The borrower then usually sells their current property and pays out the bridging finance amount leaving an end debt.
EXAMPLE
| Current property value = | $350,000 |
| Current mortgage = | $150,000 |
| New property value = | $450,000 |
The client in this case will want to borrow $450,000 to purchase the new property while he sells his current property, or in the case of construction, while it is being built.
| Total property values = | $800,000 |
| Loan required = | (existing loan) $150,000 |
| And (new loan) $450,000 | |
| Plus fees lets say $15,000 | |
| Total Loan = | $615,000 |
| LVR = | 76.9% |
The bridging finance amount would be $450,000 plus the fees of $15,000 = $465,000
The original loan would remain the same as it is now When the current house is sold, the amount of $350,000 or thereabouts (value of current house), would be paid off the bridging loan and an end debt of $265,000 would remain.
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