SO WHAT DO YOU NEED TO GET A LOAN?
The minimum requirements for any lending scenario are: Income, Identification and Security
You can be Self-Employed or PAYG as long as you can provide documents such as tax returns or payslips to verify your income
Drivers licence and Passports are the easiest, but if you do not have these, there are alternatives. For example, Birth or Citizen Certificates, Medicare or bank cards and much more..
For a refinance
A variable rate will move up or down depending on the economic environment and your lender.
The variable rate is flexible in repayments and redraws. Having the flexibility in repayments means that you can make as much extra repayments as you like without being penalized. Making extra repayments will mean reducing the balance, which will in-turn reduce the term of your loan. As Interest rates are calculated daily, paying extra today will mean less interest owed tomorrow.
FIXED RATE MORTGAGE
The Fixed Rate could be the right one for you but before you decide, you should understand what it means to fix a rate.
Choose the fixed term
Most lenders offer a 1-5 year term but some offer up to 10 years. The rate will vary depending on the fixed term/year chosen.
A fixed rate will give you peace of mind that the rate will not rise on you during the fixed term. It will allow you to budget around your home loan as you will know exactly what is being deducted each period.
Nothing comes free though. 99% of fixed rates have an annual repayment limit. This is an "extra repayment" limit, meaning that deposits into your home loan outside of your monthly home loan deduction will be considered extra. Limits can range from $5,000 to $20,000 annually.
If you choose to exit or break the loan contract during the fixed period, you may be liable for break costs. This will depend on your lender, your remaining term, your rate and loan amount.
INTEREST ONLY LOAN
Interest Only loans are facilities where the repayments made are only the interest portion. This means that you are not reducing your balance at all, and only paying the interest per month. Most Interest Only loans have term options from 1-5 years.
Interest Only loans are mainly used by investors, but still very common in owner occupied loans as well. The popularity of this type of facility is due to the ability to increase cash flow for the period that you are paying only the interest portion.
Considerations before taking Interest Only
Interest Only rates are currently higher than Principal and Interest
Once your interest only period is complete, the repayments are substantially higher due to the balance not being reduced during that 1-5 year period. You are essentially taking on a home loan with less years to pay it off so the repayments will be much more.