Principal & Interest
Also called a Table Loan, this means you are repaying both the principal borrowed and the interest charged. This is the most common type of loan taken out for an owner-occupied purchaser. The term can be anywhere up to 30 years with payments able to be made weekly, fortnightly or monthly to suit. As a general rule try to pay as much over and above your standard amount as you can in the early years of your loan as it will save you thousands in interest and reduce the overall term of your loan substantially!

Interest Only
As the name suggests you are only paying the interest being charged to you. While the repayments will be substantially less than a ‘Principal and Interest’ loan this is NOT advisable for owner-occupied purchasers. These are more common to property investors.

Revolving Credit/Flexi Account
This type of loan is worth exploring. They allow you to use your mortgage as a bank account where all income is direct credited into the mortgage. You use a credit card with up to 55 days interest free to put all household expenses on and then repay that credit card at the end of each month with a direct credit from your mortgage to clear the credit card in full, thus no interest is charged on your credit card, while your salary has sat on your mortgage all month reducing the daily interest charged. Ask your Craig Pope mortgage adviser for a further explanation. While this may sound like
a good option it tends to only work well for people with strong surplus monthly income and spending discipline. For the
wrong people, they are less effective.

Fixed Interest Rates
You can choose to fix the interest rate on your mortgage for 6 months to 5 years at a time. The upside is that repayments cannot go up during the fixed interest rate period. The downside is that if interest rates go down and you
have fixed your rate for a longer period of time you are stuck paying the higher rate. Be aware that there are some risks associated with fixing your rate for too long. Also, be aware that if you look to repay your loan in full or pay
a large chunk off at once during the fixed period there could be an early repayment penalty. You can also split your lending into various fixed rates e.g. some on 1, 2 or 3 years fixed to cushion volatility. Ask your Craig Pope Financial adviser to explain how this works.

Offset Mortgages
An offset mortgage uses your savings to help minimise your interest paid. The interest is calculated on your
negative mortgage balance minus your cheque and savings account balances.

Variable/Floating Interest Rates
This means that your interest rate can go up or down as the economy changes. The downside is that rates
can go upwards increasing your repayments. The upside is the reverse, so if interest rates fall so do your
repayments. If on a variable rate, you can ask to change to a fixed rate at any time with little or no cost. A key
advantage is you can normally make lump sum payments without penalty.

Combo/Split Loans
You can also ask to have some of your mortgage on a fixed interest rate and some on a variable rate which
can give you the best of both worlds mentioned above.