26 Jan 2023 Podcast: Q & A – What’s the Best Product For You?
In the world of property finance there are thousands of loan products, many home loan types and various terminologies. How do you make sense of it all, let alone narrow it all down to find the best option for your circumstances and strategy?
Subscribe now on Apple Podcasts or Spotify
In this episode, Evelyn and Maddie cover off all the important questions.
Don’t miss this episode.
There’s plenty more great content to come … so make sure you subscribe now on Apple Podcasts or Spotify so you don’t miss a thing.
Find out your next step in property finance:
You Have My Interest is brought to you by Everlend, a mortgage and finance broking firm built for the purpose of educating and empowering you to make informed financial decisions tailored to your wealth goals. Find out more and book in your free initial consultation at https://www.everlend.com.au/
Get in touch:
Find out more about You Have My Interest at everlend.com.au/podcast and connect with us at podcast@everlend.com.au
You Have My Interest provides information and educational content relating to mortgages, finance and property. You Have My Interest‘s content is general in nature and does not take into account the individual financial, legal or tax needs or objectives of its audience members.
It is not intended as a substitute for professional advice. Listeners should seek out a licensed professional to discuss their individual financial, legal and tax requirements.
If you need mortgage or finance advice tailored to your own personal situation, contact Everlend today for a free consultation. Everlend are authorised credit representatives of Loan Market Pty Ltd, Australian Credit Licence number 390222.
Podcast produced with Apiro
Please find a Podcast summary below with the interview highlights:
In this Q&A episode of You Have My Interest, Evelyn and Maddie, mortgage brokers, delve into loan terminology and explain the key differences and features of various loan products.
Key Topics Discussed:
- Variable vs Fixed Loans:
- Variable Rate Loans: Interest rates can fluctuate, typically following RBA cash rate changes, offering flexibility for additional repayments but with less predictability.
- Fixed Rate Loans: Interest rates are locked for 1-5 years, providing budgeting certainty and protection against rate rises, but limiting flexibility (e.g., capped extra repayments and no access to redraw).
- Offset Accounts vs Redraw Facilities:
- Offset Accounts: Fully transactional accounts linked to a loan, reducing interest by offsetting the balance. Favoured by investors for tax benefits.
- Redraw Facilities: Funds prepaid into the loan that can be accessed later but are tied to the loan account. Less flexibility than offset accounts.
- Basic vs Package Variable Loans:
- Basic Variable Loans: Simple loans with fewer features (e.g., no offset account) and lower fees.
- Package Variable Loans: Include features like offset accounts and sometimes credit cards, but with an annual fee (e.g., ~$395 for major banks).
- Principal & Interest (P&I) vs Interest-Only Loans:
- P&I Loans: Repay both loan principal and interest, reducing the loan balance over time.
- Interest-Only Loans: Repay only the interest, keeping the loan balance unchanged, typically for short-term goals like investment properties.
- Introductory (Honeymoon) Rates:
- Offer discounted rates for an initial period before reverting to higher rates. Often not widely available anymore.
- Comparison Rates:
- Include interest rates and fees to give a weighted average cost over a loan’s life. However, they may not accurately reflect specific loan details, so tailored comparisons are more reliable.
- Additional Fees:
- Upfront fees may apply, particularly for basic loans, covering valuation, documentation, or solicitor costs. Packages often include these costs in the annual fee.
- Partial Offset Accounts:
- Some lenders offer partial offset accounts with fixed loans, which only partially reduce interest charges.
Key Takeaways:
- Fixed loans provide stability but less flexibility, while variable loans allow more freedom for extra repayments and redraws.
- Offset accounts are separate, transactional accounts ideal for maximising interest savings, whereas redraw facilities are embedded in the loan account.
- When comparing loans, focus on actual dollar savings and tailored rates rather than generalised comparison rates.
Listeners are encouraged to reach out for tailored advice and stay tuned for more financial insights.