Loan Options, and their Benefits and Disadvantages

This article discusses the benefits and disadvantages of different home loan products, including no-frills loans, professional packages, line of credit loans, and honeymoon rates. It also provides selling messages for each loan type and emphasizes the importance of proper research before committing to a loan.

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Loan Options, and their Benefits and Disadvantages
To decide on the best home loan product is sometimes tricky. Wong, et al. advises the
home purchasers to engage the mortgage brokers to help them in ascertaining the different home
loan products, which might suit their requirements.
No-Frills Loans
This loan’s interest rate is quite low. The price remains small as the loan has little bells
and whistles (Sarma).
Benefits
The home purchaser pays an interest rate that is quite low, which translates to low
repayments. Hence, the buyer can complete paying the loan earlier when he or she pays in high
quantities.
Disadvantages
No-frills loans are not flexible like the others because their terms can be excessively
restrictive and can result in penalties.
Selling Message
No-frills loans are the best for the first home purchasers, since, their interest rate is
moderately low.
Professional Packages
Banks provide professional packages’ loans to the individuals in certain professions or to
the people who borrow more than $150,000 but mostly more than $250,000 (Parker).

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Benefits
Professional packages have reduced rates both for the home loans and other products that
the banks offer.
Disadvantages
The annual charges for the professional packages are usually $300 and above, hence, the
advantage of the cheap rates becomes smaller.
Selling Message
Professional packages’ loans are the best for the professional groups’ members,
individuals that borrow bulky amounts, and those requiring a collection of banks’ products.
Line of Credit
The line of credit loans allow a home buyer to use the money he or she saved for a home
on other investments such as securities (Haurin and Stephanie).
Benefits
When a home buyer needs the line of credit loans, he or she does not look for special
authorization and repayments are not set.
Disadvantages
The line of credit loans are at times costly than the other loans and a home buyer can be
tempted to pay the interest only and forget to lessen the principal, hence, have the mortgage
perpetually.
Selling Message
The line of credit loans are best for the people who think of investments and are good at
budgeting.

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Honeymoon Rates
This loan’s interest rate is quite low, although, for an agreed time then it goes up as other
mortgage products of the bank increase (Ferreira).
Benefits
The loan gives the home buyers the chance to prepare for the high-interest rates’
repayments after paying most of the loan, hence, saving a lot of interest.
Disadvantages
Once the agreed time for the low interest rate elapses, the interest rate, which is higher
than the market rate affects the homeowner.
Selling Message
The honeymoon rates’ loans are best for those buying the homes for the first time as the
individuals get the chance to pay the mortgage effortlessness, hence, understand the best way to
manage the credit.
When a home buyer requires any kind of a home loan, he or she should research
appropriately and commit, once, he or she gets the assurance that it is the correct mortgage for
his or her situations.

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Works Cited
Ferreira, Renata Ribeiro. "Stepping Stones to an Exclusionary Model of Home Ownership in
Australia." Journal of Australian Political Economy, the 77 (2016).
Haurin, Donald, and Stephanie Moulton. "International Perspectives on Homeownership and
Home Equity Extraction by Senior Households." Journal of European Real Estate
Research 10.3 (2017).
Parker, Lesley. “The Pros and Cons of Professional Packages.” The Sydney Morning Herald 29
Aug. 2007. Web. 3 Oct. 2018. <https://www.smh.com.au/lifestyle/the-pros-and-cons-of-
professional-packages-20070829-gdqzc6.html>.
Sarma, Shruti. "Meaningful Financial Inclusion." Journal of Rural Development 34.1 (2016).
Wong, Shi Yee, et al. "Improving Information Gathering and Distribution on Sustainability
Features in the Australian Residential Property Market." Journal of Cleaner
Production 184 (2018).