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Table Loan
This loan type will allow you to spread your repayments evenly over
the term of your loan. Your repayments will be the same amount each
month or fortnight, although payments will change depending whether
you are on a fixed or floating interest rate. Initially, your repayments
will mainly go towards repaying the loan interest and a smaller portion
going towards repaying the loan principal. The portion going towards
the principal will increase over the time you repay your loan so
that your last repayments are mainly paying off the principal of
your loan. |
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Reducing Balance Loan
With this loan type, your repayment will go towards repaying both
your loan interest and principal right from the first repayment you
make. The amount of your repayment going towards your loan principal
will remain the same throughout the term of the loan. This will reduce
the principal you owe and in turn, the amount of each of your repayments
will reduce gradually over time. At the start your loan repayments
will be high with this loan type. This may suit someone who is at
the peak of his or her income earning potential and may see a reduction
in income in the future (ie. retirement). |
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Interest Only Loan
With an Interest Only Loan, all your repayments during the term of
the loan will go towards repaying interest only. You will repay
the
principal in one lump sum at the time you make your final interest
repayment. This may be suitable for property investors who whish
to
keep payments at the minimum level, thus allowing them to purchase
more properties. The long-term result is that property values will
increase, while the loan stays at the same amount. |
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Revolving Credit Loan
Revolving Credit Mortgage gives you the freedom to manage your loan
as you choose. This acts as a large overdraft facility that you
can
pay extra or draw funds within your limit as required. To save on
your interest bill, you can arrange for your salary to be direct
credited
at the beginning of each month. This reduces the loan amount outstanding
on which interest is calculated daily. By using a credit card for
your expenses during the month you can collect loyalty program points
(eg air points etc) and have no transaction fees. Providing you
pay
your in full at the end of the month from your Revolving Credit facility,
you will pay no interest on your credit card. The amount of Principle
you have paid in the month is the difference between your income
and the expenses on your credit card. The disadvantage is that you
have
to accurately manage your funds, as you may not pay off any principle
or keep redrawing from the facility over the term of the loan, and
never paying it off. |
