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Australian Mortgage Loans Centre Free Newsletter
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Products & Services of AMLC

Home Loans
Standard Variable…..
Basic Variable…..
Introductory (Honeymoon)…
Fixed rate….
Bridging….
Refinance….
Non-conforming Loans
Lo-Doc…..
Credit Impaired…..
Car/Equipment Loans
Hire Purchase…..
Finance Lease…..
Com./Business Finance
Commercial…..
Short term Business Loan…..
Medium-long term Business Loans…..
Investment Property
Why is Investment Property a Good Strategy ?.......
Negative gearing……
Capital Gains Tax……
Other Loans
Line of Credit…..
Reverse Mortgages…..

Standard Variable Loan

A standard variable loan offers the customer freedom of choice with complete repayment flexibility and a full range of features. The interest rate on these types of loans fluctuates (up or down) as interest rates change in our financial markets.
 
There are additional benefits associated with a standard variable loan:-

  1. Flexibility to choose between interest only repayments or principal and interest epayments.
  2. Redraw facility is available and you can utilise this option to redraw payments already made in advance.
  3. You can have a partial or 100% interest offset facility attached to your loan when the loan includes repayments for principal and interest. Interest offset is not available on interest only loans.
  4. Principal reduction may be made at any time without attracting additional fees.
  5. You also have the option of taking the loan over a maximum of 30 years but you can opt to repay your loan in full within a shorter period of time without attracting additional penalty charges.
  6. Clients can make as many additional payments to their standard variable loan as they wish.

It is important to note that lenders may have other associated costs to cover administration fees. Our consultants can compare these facilities and ensure that the appropriate loan structure is put in place to help you achieve your financial needs.

Basic Variable Loan top

Basic variable rate loans are sometimes referred to as the 'no frills' alternative to the standard variable rate loans. The interest rate is lower than a standard variable loan, making them attractive to the budget conscious borrower. It offers a lower variable rate but with fewer features. These loans normally have no ongoing fees associated with it.

Introductory (Honeymoon) top

An Introductory Variable Rate loan generally offers a guaranteed low rate for an initial period of time (usually 12 months) after which most interest rates will revert to the Standard Variable Rate. It is Ideal for those wishing to take advantage of lower initial repayments.

Fixed Rate Loan top

Fixed rate loans are funds lent over a set term at a set interest rate. This gives the borrower the certainty of knowing exactly what their monthly repayments will be should their circumstances change. Some lenders may impose early repayment penalties if you make a lump sum reduction to your loan or you pay the loan out in full. However, a fixed rate loan is ideal in a rising interest rate market as this guarantees you of your interest rate and repayments for a set time.

Bridging Loan top

A Bridging Loan is available to borrowers who wish to purchase a new home now and sell your current home later. These loans are especially helpful to 'bridge' the gap between the sale of one property and the purchase of another. The interest rate on a Bridging Home Loan is usually the same as a Standard Variable Rate Loan. A Bridging Loan ensures that the borrower will not miss out on a desired property because they haven't sold the current home

Refinancing top

Mortgage refinancing is a process of renegotiating your original mortgage agreement.

With the lending sector constantly changing and lenders constantly enhancing their products to attract new customers, existing customers are left behind, often with products that are no longer as well placed in the market as they once were. It is always important to keep an eye on how your mortgage stacks up against current market leaders and having a mortgage broker can simplify this for you.

While there are inherent costs in altering your existing mortgage you must compare these to the savings made over the entire term of your loan.

Low Document Loans top

Low Documentation (or No documentation) loans are designed for the self-employed or small company borrower whose financial statements may not be available for many different reasons (eg Accountant hasn't completed their financials). The borrower must have a sizeable deposit or equity in existing real estate property. Generally, most lenders lend a maximum of 80% of the property value with mortgage insurance applying above 60%.

These loans are usually a variable rate and offer most of the features and benefits attached to the lender's standard variable rate loan product. A Low Document Loan can be just as competitive as a full documentation loan, however they provide less hassle as the borrower doesn't have to provide the lender income documentation.

Credit-Impaired Loans top

At some point in the past, a borrower may have experienced difficulty in meeting their monthly commitments due to lack of work, suffered unexpected business losses or had a difference of opinion with a former credit provider. Unfortunately, in these cases the former credit provider may have lodged a payment default (or black mark) on their credit report with a credit recording agency. When applying for finance, a default lodged on a credit report may cause some frustration as a lender may not take an understanding view of the borrower’s explanation surrounding the default.

Credit-Impaired Loans are designed especially to assist a borrower in these circumstances. Usually these loans incur an extra interest rate margin and possibly extra fees and charges.

Commercial Mortgages top

A commercial mortgage is similar to a regular residential loan except that the loan is applied to a purchase of commercial property. Commercial property generally includes retail shops or offices, warehouses and factory units.

Commercial mortgages are handled the same way as regular residential mortgages in that lenders want to ensure that their money will be making them more money. They will want to certify that the property being targeted is worth their investment and that the borrower’s credentials are trustworthy.

If you are looking to acquire a commercial mortgage the first thing to do is put together a package detailing the potential of the property your want to buy.
If possible you should do a little market research that demonstrates the property’s main selling points such as: if it is in a high traffic area, if it is easily accessible, etc… any feature that will make it more attractive in the eyes of a lender, whose main goal is to know that he or she will not lose money on this deal.

Finding the right lender is the next step and that is where we come in. We do more than just find the right lender for their clients; we also offer support, information and advice. Commercial property can be a great investment if well located and properly managed.

Short Term Business Loans top

From time to time business or investors find themselves in a situation where they need funds to get them through a short term slump, or to take advantage of a lucrative investment opportunity that presents itself. The business or investor may not be able to access normal loan funds in time to ward off financial difficulties or to take advantage of the opportunity that has presented itself. In both cases short term business loans may be the answer. Short term business loans are for business purposes only and usually the term is measured in months rather than years. The rate is much higher than normal business loans, (3%-10% per month are standard) but are usually easy and quick to obtain. These are pure asset lends with a maximum LVR of 80%. As it is a straight asset lend, credit checks and financials are not usually required.

Medium-Long Term Business Loans top

Many bank lenders charge hefty interest rate penalties for their business purpose loans. A surcharge of 1-2 percent is not uncommon and some overdraft rates are in excess of 12%. Non bank lenders are able to provide business purpose loans at the same rate as owner occupied home loan rates. If you need money for business purposes, why get ripped off by the banks when you can access the equity in your home or investment property at rates well below 7%.

Hire Purchase top

The Hire Purchase Agreement is simply a contract where the lender allows the client the right to possess and use an item of equipment in return for regular payments.
When the final payment is made, the title of the goods is transferred to the customer. This product is designed for businesses wishing to finance the purchase of motor vehicles and trucks, industrial plant and equipment, business and professional equipment.
Features and benefits include:

  • Repayment schedules can be structured to suit a customer’s cash flow.
  • Can be arranged with no deposit or an amount that suits the customer.
  • Flexible repayments allow for accurate capital budgeting.
  • Balloon payments at the end of the term can be arranged.
  • Client gains automatic ownership at end of term.
  • Interest and depreciation are tax deductible if business expense.
  • Client can repay the contract before the term ends.
Finance Lease top

Here the lender purchases the plant, equipment or vehicle required by the client (the lessee). The lender then leases the goods to the customer under a lease agreement.
When the lease expires the lessee can either:

  • Return the equipment to the lender who can sell it elsewhere. If the net sale is less than the residual value, the customer must make up the shortfall
  • Refinance the residual value
  • Pay out the contract
  • Make an offer to purchase, which may be accepted by the lender.
Line of Credit top

 A Line of Credit provides a borrower with access to the equity in their home or investment properties whenever they wish for any worthwhile purpose. It is similar to an overdraft facility in that funds can be withdrawn up to the original loan approved amount at anytime. The interest rate on a Line of Credit facility is usually a variable rate that fluctuates with the market. A borrower can generally access their Line of Credit via a Cheque Book, Credit Card, ATM, Phone and Internet. A Line of Credit provides a borrower with easy access to funds ensuring peace of mind in times of need.

Reverse Mortgages top

Unlike conventional mortgage products reverse mortgages (also known as equity release), focus exclusively on a specific segment of the population: retirees. They allow retiring homeowners to access a largely untapped asset to fund a standard of living that for many would otherwise be out of reach.
Reverse mortgages are similar to conventional residential mortgages in that the borrower raises funds against the security of the home. However, reverse mortgages are very different to conventional mortgages when it comes to drawdown, cash flow, and repayments.

In a normal mortgage, the principal amount of the loan is generally advanced as a lump sum to the borrower in order to a purchase a property. The borrower must then make regular principal and interest payments during the term of the loan. If the borrower defaults on the loan, the lender may recover the outstanding balance of the loan (including any unpaid interest) by enforcing its mortgage and selling the mortgaged home.
That is not the case with a reverse mortgage. In addition to having the option of receiving the principal in an upfront lump sum payment, the retiree can also choose to receive the principal in the form of regular part-payments from the lender during the term of the loan.
The retiree is not required to make any repayments (whether of principal or interest) to the lender during the term of the loan, however in some cases may have the option to do so. Instead, the entire loan (including accrued interest) falls due on the death of the retiree, or when the retiree moves out of the mortgaged home permanently, for example into a nursing home or if the property is sold.

The lender then recovers the loan by either having the beneficiaries of the retiree's estate pay the debt, or by enforcing its mortgage and selling the mortgaged home. In most cases, the lender will give the retiree's beneficiaries up to six months to finalise the debt. If the lender sells the property, they will give any funds left over to the estate of the retiree.

Why is an Investment Property a Good Strategy ? top

Most people like property because they can see it, touch it and watch it grow in value over a period of time. If bought in the right area (location), it can offer good returns in capital growth in future years. Also, the depreciation, coupled with rental income, makes this method an easy way to get into property and make it an attractive proposition.
If you already own a property it makes getting into an investment property much easier as you can use the equity in your home as a deposit towards an investment property.

Negative Gearing top

Negative Gearing is the situation when an investment such as property is purchased with the assistance of borrowed funds and where the rental income after the deduction of expenses (such as interest, bank fees, insurance and strata fees) is less than the interest commitment in the course of a financial year.

For tax purposes this negative net income can then be offset against any positive income from other sources. This is a very handy tool in minimizing tax.

Capital Gains Tax

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Capital gains are the profits made on selling assets. Your primary place of residence is exempt from any capital gains tax. An investment property sold at a profit will attract a capital gains tax on the profit. The amount will be added to your regular income and taxed at your marginal rate. However, depending on your situation at the time of selling a property, the capital gains tax could be adjusted to be reduced by way of new investments put in place. You should get advice on this matter before selling so that you can structure it correctly.

Product Features top
  • Interest Only Loans
  • 100% Mortgage Offset Accounts
  • Redraw Facility
  • Split Loans

Interest Only Loans

An Interest Only Repayment Facility is usually available on Investment Loans. The interest is calculated on the original borrowed amount and requires no principal reduction. An ideal borrower is an Investor looking to maximise his tax & negative gearing benefits by simply paying the interest on the loan.

100% Mortgage Offset Accounts top

A Mortgage Offset Account gives you all the features of a normal transaction account, but instead of earning interest, you can use the account balance to offset the interest charged on  the home loan. Any money you put into the offset account is deducted from your home loan balance before the interest is charged. A great way for a borrower to use their savings to reduce the interest charged on their home loan.

Redraw Facility top

When a borrower pays extra or additional repayment on their home loan they have the ability to redraw or withdraw the extra repayments that they are in advance. A Redraw Facility works similar to an, 'all-in-one' facility. The borrower deposits all of your income and savings into the loan and then they can withdraw the money from the home loan account for all your day-to-day expenses.

Another excellent way to save interest on your home loan is to make your day-to-day purchases on an Interest Free Credit card and 'redraw' the full balance of the card at the end of the interest free period to pay the card off in full.

Split Loans top

A split loan is ideal for a borrower who wishes to have two loan products rather than one. An example is a borrower who wants to take advantage of fixed rate loan products in combination with a variable rate loan product. The borrower can fix in portion of their loan to provide stability of interest rate and repayment but still allowing themselves the flexibility to make additional and lump sum repayments on the variable portion of the loan.

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