Buying a home is one of those watershed events in a person’s life. Often, it marks the passage into adulthood.
    The housing market across Australia, especially in capital cities, is a topic of heated debate these days.
    So many differing opinions, the market is cooling, growth will continue, and the bubble has already burst are just a few of the many conflicted ‘expert’ sentiments.
    Knowing what to believe and where to turn for advice can be difficult, but Quantum Finance Australia is here to help.

    At Quantum Finance Australia our team of advisors focus on what you need; we are not going to force you into a one-size-fits-all home loan. We are one of Western Australia’s most trusted home loan facilitators, and we will put our years of experience and expertise to work brokering a home loan that will fit your needs and exceed your expectations.

    Learn More About Perth's Leading Mortgage Broking & Private Lending Service

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    Types of Home Loans Available

    Many of our clients are surprised to learn how many different varieties of home loans options are available.

    It is easy to feel overwhelmed when searching for a home loan. There are many types with various terms and features, and of course, you want to choose the loan that fits your needs best. Here are the types of home financing available to you as well as a brief description of each

    Basic Variable Rate Home Loans

    This type of loan is also frequently known as a ‘no-frills’ loan. It is an excellent option for our clients looking for a simple loan with a good interest rate. The basic variable home loan works well for first time home buyers.

    What are some Advantages of the Loan?

    • Flexibility to make extra payments
    • No ongoing fees
    • When interest rates fall, so does your payment

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    Standard Variable Rate Home Loans

    The most common home loan across Australia, the standard variable rate home loan is an excellent option for nearly every potential homebuyer. These loans are flexible, straightforward, and come with helpful features that many borrowers appreciate.

    What are some Advantages of the Loan?

    • Extra repayments are permitted
    • Option for redraw
    • Great rates
    • Payments lower when interest rates drop
    • Offset account usually available

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    Fixed Rate Home Loans

    Fixed rate home loan locks in your interest rate for a set amount of time. Typically, the time frame is between one and five years, although more extended options are often available. Borrowers who benefit the most from a fixed rate are those who want the ability to make long-term budgets, would struggle financially if interest rates rise, and are not interested in their house payment being tied to rate fluctuations. The most significant drawback to the fixed rate is your inability to make extra payments during the term of the loan.

    What are some Advantages of the Loan?

    • No payment increase if interest rates rise
    • The accuracy of the household budget
    • Peace of mind for borrowers who like certainty

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    Split Rate Home Loans

    Split rate loans allow borrowers to divide the terms of their interest rates on a home loan. You can choose the way the loan divides. For example, if you finance a $500,000 home at a 50-50 split half of your loan amount will be at the fixed rate and the other half of your loan amount will be a variable interest rate and subject to fluctuations.

    A split rate home loan is often the suitable of both worlds for borrowers experiencing difficulty choosing between wanting a chance to pay down their home loans and needing the predictability of a locked-in interest rate. This is because the variable portion of the split rate will allow for early repayment.

    What are some Advantages of the Loan?

    • Provides a certain amount of stability regarding repayment amounts
    • Offer option of early repayment

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    Interest Only Home Loans

    Borrowers using the interest only home loan finance option will pay just the amount of interest on the amount of their home loan.

    Example:

    Loan amount: $500,000
    Interest rate: 4.5 per cent
    Monthly interest-only payments: $1875.00

    Typically, the interest-only loan has a time limit of between one and five years. When the interest-only period ends, borrowers must begin paying on the interest and the principal of the loan.

    What Options do I have after the Interest - Only Period?

    • Payoff the outstanding balance
    • Refinance your home
    • Negotiate another period of interest only payments
    • Continue paying the new loan amount and pay interest and principal

    The interest-only loan is typically popular with those who can write off taxes. This type of loan carries the possibility of a distinct disadvantage because if your property value becomes less than the principal, you have negative equity.

    What are some Advantages of the Loan?

    • Smaller monthly payments can help if your budget is tight
    • Helpful for property investors who can deduct the interest payments on income tax

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    The Line of Credit Home Loans

    The line of credit home loan is among the most flexible loans available. It is a home loan where the borrower will get the loan against the equity built in their property. A line of credit home loan is comparable to a credit card with a substantial credit limit. The amount of the credit available depends on, among other things, the amount of equity you have in your property. The funds are used at the borrower’s discretion and often include renovations, repairs, or investment properties.

    Clients using the line of credit home loan should note that if they have inadequate financial discipline, there is a chance of incurring a large amount of debt so significant that they could lose their house. Additionally, the equity in the property may decrease even if the property is safe.

    What are some Advantages of the Loan?

    • Interest is only on the amount of the loan borrowers use
    • Helpful for borrowers who are self-employed or otherwise have irregular sources of income
    • Interest rates are lower than credit cards and personal loans
    • Offers borrowers the chance to use the equity in their home to finance necessary activities or to purchase an investment property

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    Introductory Home Loans

    Borrowers who get an introductory home loan (also called Honeymoon rate home loans) enjoy a very low-interest area on the first year of their home loan. After the initial period is over, the interest rate on the loan will rise to the same rate as standard home loans. Occasionally, borrowers are not prepared for the new payment amount after the interest rate raises and may struggle to make the payments on their home.

    What are some Advantages of the Loan?

    • Helps first-time home buyers get affordable payments
    • The borrowers can pay down the principal amount of the loan during the introductory period

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    Low Doc Home Loans

    The low documentation home loan (low doc home loan) just as it seems, requires fewer papers and proof from loan applicants. A low doc home loan works especially well for borrowers who are self-employed or casual workers. Occasionally, these loans come at a higher interest rate than other home loans, and borrowers may need to provide a more considerable down payment amount.

    What are some Advantages of the Loan?

    • Allows qualified non-traditional borrowers a chance at home ownership
    • Often will overlook recovering credit

    Low Deposit Home Loans

    As property values (and home prices) rise across Western Australia, the amount a potential borrower needs for a deposit on a home also rises. Consequently, saving enough for a deposit on even a modest house is a real challenge.

    Low deposit home loans can help potential buyers purchase property with significantly less money down. The caveat is often higher interest rates on the loan as well as Lenders Mortgage Insurance (LMI) added to your loan.

    A guarantor with equity built in their property is a useful way to avoid LMI and normalise your mortgage rate. In some cases, a deposit is not necessary with a loan guarantor.

    What are some Advantages of the Loan?

    • The most significant advantage to a low deposit loan is that it will save money in the long run during periods of steadily rising home prices

    Construction Home Loans

    The construction home loan differs from a typical home loan because the entire loan amount does not pay for the purchase all at once. A construction loan is usually an interest only loan during the phases of building. This lowers the overall interest paid as the charges occur as payments release. Western Australia has a specific protocol outlining when payments to contractors are necessary. During this time, it is possible that the majority of the loan is drawn down for several months. This means your payments will be very close to the maximum. Once the project finishes, the loan changes from the interest only to another type of loan.

    What are some Advantages of the Loan?

    • Payments are in stages instead of 100 per cent at once
    • Interest only until completion of the property

    No Deposit Home Loans

    Loans requiring zero deposit are now known as guarantor home loans. While at one time no deposit loans were available without a guarantor, the financial crisis of 2007 sparked the end of this loan variety. Potential homeowners who have a guarantor with enough accrued equity can borrow without a down payment. Additionally, this type of loan prevents paying LMI charges and will save the borrower thousands of dollars over time.

    Typically, the parents of a borrower act as the guarantors for the loan, however other family members can be guarantors as well. While this situation is not ideal for every family, many first-time home buyers find this the most suitable route to homeownership in Western Australia

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    ** Comparison rates are based on a loan of $150,000 over a term of 25 years. WARNING this comparison rate applies only to the example given. Different amounts and terms will result in different comparison rates. Costs such as economic cost and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan.

    * Please note not all loan types are suitable for all applicants and the above rate is for general advertising purposes only. Please check the applicable rates are still valid with a Quantum Finance broker. Your full financial situation will need to be reviewed prior to acceptance of any offer or product