Various Types of Home Loans - Part 1

The Australian property market is one of the most sophisticated in the world. Subsequently, the mortgage market is also highly sophisticated. Although there is still some level of government control over the mortgage market, the reigns were loosened a while ago when the finance market was deregulated.



Deregulation has allowed a number of new lenders to move in to the Australian property lending market. This has in turn resulted in a wide variety of products available from many different lenders. There are now home loans for almost all types of borrowers from various different financial and employment situations.



These articles provide information on home loans and some current mortgage news to help you decide what type of product is best suited to your needs.



Standard Home Loans



Although there is no definition of a "standard" mortgage product, it could be said that a product with a variable interest rate and no flexible features could fit the name. This would be like a basic mortgage product that used to be issued by a big bank before deregulation.



A standard home loan product would only be available to borrowers with perfect credit files and who have a safe, secure job with a consistent salary. To buy a house with this type of home loan you would also need enough cash to fund a large deposit of about twenty percent.



Needless to say, this type of mortgage product is rare these days. Home loans typically have at least one variable that is non-standard because people live completely different lifestyles to those that existed several decades ago.



Low Doc Home Loans



Low doc home loans are one of the most flexible types of mortgage products. This type of mortgage does not require the applicant to prove their income by way of wage slips. Why? This is usually because most applicants of low doc loans do not have pay slips because they’re self employed.



This product was invented to cater for self-employed workers who make a good living but cannot prove their income in the same way as salary earners. Self-employed workers are often able to pay off home loans just as well as there employed counterparts.



Instead of salary or wage slips, applicants declare their earnings on a legal document and submit it with their application. This is a legal document so it is necessary to tell the truth.



Just like other mortgage products, the lender will assess the applicant’s ability to repay the loan. Low doc loans usually require a larger deposit than standard mortgage products, so evidence of being able to fund the deposit will form part of the application.



Some low doc loans offer flexible options such as lines of credit and offset accounts, just as standard products do. Not all low doc loans offer flexible benefits, so it pays to shop around. Interest rates are also generally higher on low doc loans than standard loans, to provide for the extra risk to the lender.



Read the latest Mortgage News and stay in touch with the home loan market at http://www.moneynet.net.au/. http://www.moneynet.net.au/