Fixed-rate loans allow you to fix your interest rates and repayments for an agreed period of time. This is generally set for one to five years, but can be up to seven years. At the end of the fixed term period, the loan will generally revert to a variable loan or you may choose to roll over for another fixed term at the rates applicable at that point in time. This is also a good time to review your overall financial position, and see what other loan offers are available.

Many clients like the fact that these loan repayments will not change during this period and with absolute certainty, they can budget their repayments.

The interest rate in a variable interest loan is, as you may have guessed, variable. The interest rate charged by your lender may vary throughout the life of the loan according to market conditions and indicators such as the Reserve Bank of Australia’s cash rate.

In other words, the repayments associated with the loan can also go up or down at any time. Many variable loans now offer a wealth of features such as an offset account or the ability to make extra repayments and redraw funds. Some institutions also offer basic or ‘no-frills’ variable loans with a lower interest rate but fewer features.

You'll often hear the media refer to the “standard variable interest rate” or SVR. This a benchmark rate, used by banks and lenders. These rates are not what customers usually pay, as they are typically only referenced rates and they are certainly not the rate a lender will offer you. When a lender says they will give you a discount of 1%, they are discounting off the SVR.

The amount of your loan will generally have a direct relationship to the amount of discount offered. If you decide to choose a variable interest home loan, a lender will generally offer you a discount on the variable rate anywhere between 0.10% and 0.70%, depending on the size and features of the loan. Larger loans with low LVRs can attract a discount of up to 1.4%. 

Categories of variable interest rate loans are the basic variable rate loans, which often feature lower interest rates. These loans tend to have limited features, although most will give you an option to redraw.

When applying for a loan, most lenders will request that you show proof of “genuine savings”. This is to show that you have a deposit, but more important that you have an ability to save money.

You’ll need to have at least three months’ worth of savings to assess your genuine savings.

A lender may ask to see bank statements to show you are contributing on a regular basis, and to prove you haven’t borrowed an amount of cash to put in your account for show.

A few examples of genuine savings are:

• Regular deposits to your savings account over a three-month period;
• Term deposits that have been active for three months;
• Equity in an existing property;
• Gifts from family, or an inheritance that has been held in your savings account for a minimum of three months

No! One of the reasons I made the leap from a bank manager to mortgage broker was so I could offer my customers real options. The only criteria I use in determining which bank to lodge a loan with is what is best for you..

I am accredited with 30 lenders and they all want your business. I receive payment from the lender you choose. For a lender, it’s similar to paying commission to a bank manager based on home loan sales.

Your credit file is one of your most important financial assets. It is a record of your financial history and includes information such as

• Your name
• Address
• Date of birth
• Your credit history (past and present).  

It also contains a list of companies or persons who you have applied for credit with. It will show if you have any credit defaults, which may impact your ability to obtain finance. All lenders will check your credit file as the first step in assessing your loan application. 

We’re located at 767a Nicholson St, Carlton North in Melbourne. For locals, that’s the Brunswick Road end of Nicholson Street.