Homeside Fixed Rate (Interest Only Mortgage)

When you have a home loan it can feel as though every news report and newspaper headline is a prediction about where interest rates will be headed next month. Well instead of waiting with baited breath on the first Tuesday of each month, choose a Homeside fixed interest rate mortgage and put some stability and reliability back into your life, and your budget.

With a fixed interest rate, your repayments are also fixed, so you know exactly how much you will be paying each month, over your fixed rate term. The Homeside fixed rate mortgage also features:

• Interest only repayments. While on a fixed interest rate term, you can reduce your monthly outgoings further by paying only the interest which has accumulated on your loan in that month. You are not able to make any payments to your principal loan amount during that time, and if your repay your loan in full within the first four years, you will be charged an early exit fee.
• Your choice of fixed rate terms. You can choose an interest in arrears loan for a term of one, two, three or five years. You can choose an interest in advance loan for a one year fixed rate term.
• Rollover a fixed rate term. At the end of your fixed rate term you can choose to enter another fixed rate term at the new fixed interest rate, and you can also apply to transfer your loan to another Homeside product.
• No service fee. On the fixed interest rate mortgage with interest only repayments, there is no loan service fee payable.
• Automatic repayments. You can set up an automatic debit from a nominated account with any provider so that you never miss a repayment, and don’t have to remember to make one.
• Homeside packages. The Fixed Rate (Interest Only) Mortgage can be packaged with a range of Homeside products to create a solution which is right for you.
• Portable loan. With a portable home loan you can keep your mortgage if you decide to sell your original property and purchase a new one.
• Investment loan. The Fixed Rate (Interest Only)Mortgage can only be used for residential investment purposes.
• Five year loan term. The term of the Fixed Rate (Interest Only)Mortgage is five years and at the end of this time you must repay the loan in full or apply to refinance with another Homeside product.
• Low doc application. If you are self employed or a contract worker who cannot verify their income, you can apply for a low doc version of the loan, where a low doc application fee applies. The standard application fee is $600.

How to Use the Fixed Rate (Interest Only) Mortgage

Having just a five year loan term on your mortgage may seem like a very short time to repay your entire borrowings, however, a fixed rate, interest only mortgage for this short amount of time can be perfect for a property investor.

A property investor benefits from fixed interest only repayments because:

• They have a fixed outgoing amount. When you invest in property, you are renting it out, so you already have the mortgage or rent to pay on your own home. Therefore, you want your other expenses such as your investment loan repayments, to be reliable and remain steady even in the face of economic uncertainty and change, and with a fixed interest rate, your repayments are fixed too.
• Only the interest is claimable on investment loan repayments. The interest on an investment loan is an investment expense and is therefore tax deductible, where repayments on the principal amount are not. Therefore, when you are able to make interest only repayments on your investment loan, you can easily track claimable amounts in your loan account.

How an investor can use the Homeside Fixed Rate (Interest Only) Mortgage:

• Purchase an investment property with capital growth potential. You will need to make sure you do your research when choosing an investment property, and look for one in an up and coming area where the demand for property is going to increase in the coming years, in turn increasing the value of your property.
• Make interest only repayments. Over the five year loan term your rental income covers some of your expenses, but you continue to pay for maintenance costs and pay off the interest which has accumulated. You don’t repay any of your principal loan amount, and your loan balance remains the same.
• You sell your investment for more than you paid for it. In five years time your property will have appreciated in value and you can sell the property, paying off the original loan amount, and keeping the profits. The profit is the difference between the price you paid, and what the property is worth five years later, as property always increases in value, so it doesn’t matter that you didn’t repay any of your principal loan balance.

Read the official terms and conditions

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