Home Equity Loan : Known by a number of names, a Revolving Line of Credit, a Line of Credit Home Loan, and a Home Equity Loan, this type of loan has become popular due to its flexibility and features.
It's a similar concept to having a credit card but much larger in credit limit. A Home Equity Loan is a credit facility secured with a first mortgage on a residential property. It allows you to withdraw funds up to a set limit (the equity you have in your home) at any time.
A Home Equity Loan allows you maximum flexibility with your finances.
You can use the line of credit to carry out renovations, invest in shares, purchase another investment property or pay the bills.
Consider the following pros and cons before you decide on a Home Equity Loan:
Pros of a Home Equity Loan
* A home equity line of credit offers a much lower rate of interest than credit cards
* Interest paid on your home equity line of credit is tax deductible, a benefit not available with credit cards
* Flexible payment options - Some lenders offer interest only equity lines of credit which gives you the option to pay only the interest for a pre-determined amount of time or pay interest plus as much or as little principal as you want
* Accessibility - Money is easily accessed by cheque or ATM card linked to this loan
* Repayments can be made in full or on a monthly basis
* Extra repayments are allowed at any time
* Cheque book facilities are available if needed
Cons of a Home Equity Loan
* The interest rate of a home equity line of credit changes with the prime rate. There is also a margin that is added to the interest rate, which is fixed and is determined at the time of application
* Typically attracts higher interest rates than your standard variable rate loans
Low Doc Home Loan: If you are self employed and don't have your financials in order, don't scratch your head wondering if you can obtain finance or not.
One option most lenders offer is a simple and quick loan called a Low Doc Home Loan. Low Doc Home Loans cater mainly for self-employed borrowers who are unable to provide full financial statements and other evidence of their income.
More and more lenders are adopting the growing trend of low doc home loan products on the market with many lenders offering standard and premium 'low-doc loans', with the choice of fixed or variable interest rates.
With access to hundreds of lenders and the leading home loans on the market, you can be sure with DirectMoney HomeLoans, we will find the best rate and featured home loan for you.
Depending on the lender, some require you to pay for Lender Mortgage Insurance (LMI) if your loan reaches 80% loan to value ratio (LVR). Due to the risk associated with self employed customers some lenders also charge a higher interest rate for these products. After a period of time, or when customers are able to show their tax assessments, then the lender may reduce the interest rate for you.
Consider the following pros and cons before you decide on a low doc home loan:
Pros of Low Doc Home Loans
* Proof of financials is not needed
* Simple statement of financials required instead of a tax return
* Non-traditional and irregular income sources are considered
Cons of Low Doc Home Loans
* You pay higher interest rates and fees
* Your cash flows might suffer due to higher repayments
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