When you're buying a home in Eltham, understanding the various features available with home loans can make a significant difference to your financial situation. At Premier Path Finance, we help locals access Home Loan options from banks and lenders across Australia, ensuring you understand what's available before making this important decision.
Interest Rate Types: Fixed vs Variable
One of the most important features to consider is your interest rate structure. You'll typically choose between:
• Variable interest rate: This moves up and down with market conditions. While your repayments can fluctuate, you might benefit when rates fall and often have access to additional features like offset accounts
• Fixed interest rate: Locks in your home loan interest rate for a set period, usually 1-5 years. A fixed interest rate home loan provides certainty with your repayments, making budgeting easier
• Split loans: Combine both fixed and variable portions, giving you some stability while maintaining flexibility
Variable home loan rates currently dominate the Australian property market, but many borrowers appreciate the predictability that comes with fixing at least part of their loan amount.
Offset Accounts and Redraw Facilities
An offset account can be a powerful feature for reducing the interest you pay. This transaction account is linked to your home loan, and the balance offsets against your mortgage balance for interest calculation purposes. For example, if you have a $500,000 loan and $50,000 in your offset account, you only pay interest on $450,000.
Redraw facilities allow you to access any extra repayments you've made above your minimum requirement. This provides flexibility if you need funds for renovations or other expenses.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Premier Path Finance today.
Loan to Value Ratio and Lenders Mortgage Insurance
Your loan to value ratio (LVR) significantly impacts your loan features and costs. This represents how much you're borrowing compared to the property's value. When your LVR exceeds 80%, you'll typically need to pay lenders mortgage insurance (LMI), which protects the lender if you can't meet your repayments.
A lower LVR often means:
• Access to more Home Loan options
• Potentially lower interest rates
• Interest rate discounts from some lenders
• No LMI requirements
Repayment Options and Flexibility
Modern home loans offer various repayment structures:
• Principal and interest: You pay both the loan amount and interest, gradually reducing your debt
• Interest-only: Initially pay only interest, though this increases your long-term costs
• Weekly, fortnightly, or monthly: Choose a frequency that suits your income cycle
Many lenders also allow extra repayments without penalty, helping you pay off your mortgage sooner and save on interest.
Pre-approval and Application Features
Home Loan pre-approval gives you confidence when house hunting in Eltham's property market. This process involves:
- Assessing your borrowing capacity based on income, expenses, and credit history
- Reviewing your banks statements and financial documentation
- Providing conditional approval for a specific loan amount
- Giving you a clear budget for your property search
The application process has become more streamlined, with many lenders offering online applications and faster processing times.
Additional Features to Consider
When applying for a home loan, consider these additional features:
• Portability: Transfer your loan to a new property without refinancing
• Multiple splits: Divide your loan into different portions with various rates and features
• Professional package discounts: Reduced rates and waived fees for certain professions
• Family guarantor options: Use family property as additional security
Making the Right Choice for Your Situation
Calculating home loan repayments involves more than just the interest rate. Consider ongoing fees, feature availability, and how the loan structure aligns with your financial goals. Your income stability, deposit size, and future plans all influence which features will benefit you most.
Some borrowers prioritise flexibility and choose variable rates with offset accounts, while others prefer the certainty of fixed rates. There's no universal solution – it depends on your circumstances and comfort level with interest rate movements.
Working with experienced mortgage brokers means you can access a comprehensive range of lenders and compare features across different institutions. This approach often reveals options you might not have considered and can help optimise your loan structure.
Understanding these features empowers you to make informed decisions about your home loan. Whether you're a first-time buyer dealing with stamp duty considerations or looking to utilise existing home equity, the right combination of features can support your property ownership journey.
Call one of our team or book an appointment at a time that works for you to discuss which home loan features align with your goals and financial situation.
