Types of Home Loans Explained

This assignment delves into different types of home loans available in the market. It provides a detailed analysis of each loan type, including VA loans, honeymoon loans, no frill loans, lines of credit, and professional packages. For each loan, the document outlines its benefits and drawbacks, helping readers understand the advantages and disadvantages associated with each option. The aim is to provide a comprehensive guide for individuals seeking to finance their home purchases.

Running head: FINANCE AND MORTGAGE BROKING
Finance and Mortgage Broking
University Name
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Authors’ Note

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FINANCE AND MORTGAGE BROKING
Explanation of various loan options that can be availed are presented below along with
their pros and cons
VA loans: In case if purchaser is a veteran, then the home buyer can avail loans that are
allowed to veterans along with their living spouses to purchase a home having no money and
restricted closing costs (Liu et al. 2016).
Benefits: In this scheme, average rate of interests tend to be lesser than the ones found in
typical mortgage, necessities of credit as well as income are also said to be more bendable.
Again, these loans do not have the need for mortgage insurance that in turn lessen monthly
payments (Liu et al. 2016).
Disadvantages: In case of VA loans, funding fee enhances in case eligibility of used more
than one time.
Honeymoon Loans: This loan is made available to first time home purchasers in which
introductory rate necessarily have two different forms (Liu and Roca 2015). The first form is
fixed discount (variable in nature) and second is the discounted fixed rate (fixed at a specific
level or else margin under the standard variable rate).
Benefits: These loan offer a very cheap rate although for a limited time period.
Disadvantages: Honeymoon Loans are normally offered to fresh borrowers. This refers to the
fact that the people who already has a particular loan with lender is normally not eligible (Liu
and Roca 2015). Also, majority of the loans might revert to the standard variable rate
essentially after introductory period.

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No frill loans: This is necessarily a low interest and simple home loan that can be associated
to low running costs.
Benefits: Interest is at a very low rate that can be implemented to different home loan
alternatives (Liu and Roca 2015).
Disadvantages: Facilities such as redraw facility might not be obtainable with no frill home
loans although the alternative of making additional payments to lessen the mortgage is
normally available.
Lines of credit: A line of credit refers to a specific category of loan in which the bank or any
other lender delivers a specific amount of money to a specific borrower (Liu et al. 2016).
Benefits: the line of credit provides a very flexible way of borrowing and this permits only
the requisite money at a specific time period as opposed to a lump sum one.
Disadvantages: The disadvantages of the line of credit include possibility of increase in the
rates of interest. This loan also does not essentially make certain repayment of the main
balance or in other words principle (Liu et al. 2016).
Professional package: This is another type of package that is necessarily heavily marketed
and the pack comprises of the following:
-Discounts on rates of interest on specifically home loans on variable rates
-Four credit cards can be used (Yates 2014)
-Discount on particularly insurances counting building, protection of earnings as well as
landlord insurance shield.
-Waivers on various fees or reduction on different valuations

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Benefits: Majority of the lenders offer specific packages for different borrowers that take up
$250000 or else higher even though some kind of discounts is available. It is suitable in case
borrowed amount is greater than $250000 changes can be brought to borrowing (Yates 2014).
Disadvantages: Commonly it can be said that annual fee is high and professional package
delivers a wide range of discounts on both bank accounts as well as lending products.

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References
Liu, B. and Roca, E., 2015. What drives mortgage fees in Australia?. Accounting &
Finance, 55(3), pp.861-880.
Liu, M.H., Margaritis, D. and Qiao, Z., 2016. The Global Financial Crisis and Retail Interest
Rate Pass-Through in Australia. Review of Pacific Basin Financial Markets and
Policies, 19(04), p.1650026.
Yates, J., 2014. Protecting housing and mortgage markets in times of crisis: a view from
Australia. Journal of Housing and the Built Environment, 29(2), pp.361-382.