At Switch Finance we like to put the power in your hands by providing access to educational fact sheets that help you to make informed choices. We are all about transparency and integrity, and we talk in layman’s terms.
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Interest Only Loans
With an Interest Only loan (IO), your repayments only pay the interest that is due and do not reduce the balance (or the amount you borrowed). As a result, an IO loan can only be obtained for a limited period (usually up to five years). At the end of the IO period, the loan will automatically convert to a P&I loan unless you make an application to extend the IO period.
Variable Rate Loans
Variable rate home loans are popular and offered by most lenders. With a variable rate loan, the interest rate you are charged can fluctuate in line with market interest rate changes. Because of this, your home loan repayments may also vary. Generally, the variable interest rate on your loan will move in line with the market rate set by the RBA, but banks can set their own interest rates and change them at any time.
Fixed Rate Home Loans
A fixed rate home loan allows you to set your interest rate for a period of time. This is usually in the range of one to five years. Sometimes, you can arrange to secure your interest rate for longer.
Fixing your interest rate can be a suitable option for some people…
A split rate home loan is a loan that allows you to split your home loan into multiple loan accounts that attract different interest rates.
A common example is to split your home loan to obtain a variable interest rate on one portion of the loan and a fixed rate on the other.
Offset Account Redraw Facilities
A mortgage offset account is a savings or transaction account that can be linked to your home loan. The balance in this account ‘offsets’ daily against the balance of your home loan before interest is calculated. An offset account can help you cut years off your home loan term and save money on interest.
Credit cards can be a convenient way to manage your finances, but they can also be expensive and risky. If you’re deciding whether or not a credit card is right for you, here are some of the things you should consider.
Lenders Mortgage Insurance
Lenders Mortgage Insurance is often referred to as LMI. It is insurance that a lender takes out to insure itself against the risk of not recovering the full loan balance if the borrower (you) were unable to meet loan repayments.
LMI is a one-off fee charged by the Lender to you when you need to borrow more than 80% of the value of the property.
First Home Buyers
Family Pledge Guarantee
Saving the deposit for your first home can be difficult and take a number of years. One way to potentially get into your own home sooner is by having a family member act as a guarantor.
Many lenders allow parents or someone who is close to you, to use the equity in their property as security for your home in lieu of you saving the full deposit required. This person is known as a guarantor.
Debt consolidation involves bringing your existing debts together into one new loan. The objective is to reduce the number of individual payments you make and reduce the interest rate you are paying on your more expensive debts.