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Standard Variable RateThis is the most popular loan due to its flexibility. The Standard Variable Loan allows you to pay more than the minimum repayments, which limits the interest you have to pay. You can pay off your loan sooner, or redraw those extra funds when you need them. You can also offset other credit balances against your loan balance. Repayments are calculated on the current interest rate. Your repayments drop if interest rates drop, though your repayments increase if interest rates increase. If you think you may not need the added benefits, you may be more interested in some of the other options that offer a lower interest rate. Basic Variable RateThis option is very similar to the Standard Variable, but without the added benefits of the ability to make additional repayments, the redraw facility and the offset facility. Without these extras, the lender can afford to offer you a lower interest rate on the loan. Again, repayments may fluctuate according to interest rates. Fixed RateFor the Fixed Rate Loan, an agreed interest rate is fixed for the duration of the loan. This offers you the security of set repayments, ideal for budgeting, though you generally don’t get the added benefits of Standard Variable loans. Offered as Principal and Interest, or Interest Only. IntroductoryThe Introductory Loan guarantees a low interest rate for a set duration. During this period, your repayments will be fixed. After this period, the standard variable rate will be used and your repayments may then fluctuate according the current interest rate. Line Of CreditThis option is an ongoing source of low cost finance similar to an overdraft facility, usually secured against your equity. Interest is simply paid based on the outstanding amount owed. This is a very flexible loan, providing you with extra funds when you need them, though it is only suited to people who have a good handle on their finances. BridgingA Bridging Loan provides you with the finance to buy your new home before selling your current home, provided that you have suitable equity on your current home. Split RateChoosing a Split Rate Loan, allows you gain advantages of more than loan option. A Variable Rate Loan can be applied against part of your loan, while a Fixed Rate Loan can be applied against the rest. You then gain the advantage of a partially fixed rate, but also gain the added features of a Standard Variable Loan. Your repayments may still fluctuate according to interest rates, but will not vary as much as a Variable Rate Loan. All In OneThis option, allows you to repay more than the minimum repayment amounts, which you can then redraw when you need them. The benefit of this, is that you will not pay as much interest since, the more funds you repay, the more your minimum repayments will drop. All In One functions like a normal bank transaction account. Note that the interest rate may be marginally higher than other options, so it is worth ensuring that the offset benefit will outweigh the higher interest rate. Interest in advanceA fixed rate loan, that allows you to pay the interest in advance. This can be used to gain a tax benefit in the current financial year. Generally used for investment loans. Professional PackagesSome lenders offer discounts to professionals. Up to 0.7% can be deducted from the current interest rate. Low Doc LoansGenerally offered to the self employed, who have difficulty proving their earnings. A declaration is supplied, stating that the applicant can afford the repayments. The interest rate is generally a little higher due to the higher risk. Credited Impaired ProductsOffered to customers with bad credit ratings as a “last resort”. The interest rates are high due to the higher risk. Contact ProwestProwest can provide you with further information on any of these products and can help you determine which option will be best suited to your needs. Contact Prowest now. |  |
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