FNS40815 Certificate IV in Finance: Loan Product Report

This report provides an analysis of four different loan products: no frills loans, professional packages, line of credit, and honeymoon rates. It outlines the advantages and disadvantages of each, focusing on features like interest rates, eligibility, and associated costs. The report discusses the suitability of each loan type for different borrowers, such as first-time homebuyers and professionals. Specifically, the report highlights the benefits of no frills loans for first-time homebuyers, emphasizing their low-interest rates and associated costs. The report also discusses the benefits of professional packages for professionals, such as doctors, accountants, and lawyers. The report also includes a discussion on the benefits and disadvantages of line of credit and honeymoon rates, and concludes with a recommendation for a potential first-time homebuyer.

Running head: FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING
Fns40815 Certificate IV in Finance and Mortgage Broking
Name of the Student:
Name of the University:
Authors Note:

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FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING
Contents
No frills loans:.................................................................................................................................2
Professional packages:.....................................................................................................................2
Line of credit:..................................................................................................................................2
Honeymoon rates:............................................................................................................................3
References:......................................................................................................................................4

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FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING
No frills loans:
The associated running costs of no frills loans is lowest with low interest rate on such
loans. Generally such loans are used to finance acquisition of personal home. Thus obviously the
benefits of such loan is the low rate of interests and associated running costs of the loan. The
disadvantages of this type of loan include that mainly such loan is available to finance home and
the requirements to be made by the borrower are quite difficult.
Professional packages:
With the objective of rewarding low risk high profit customers’ professional package
loan has been introduced. Generally the professional package loans are provided to the
professionals like doctors, accountants, lawyers and other professionals. The advantages of
professional package loans include generous discount allowed on the rate of interest and allows
100% offset of the loan amount. Thus, this type of loans help the professionals to save more on
substantial amount on home and other loans. The demerits of professional packages include high
amount of annual fee and the loan is only available to professionals. Thus, such loans are not
available to general customers (Aalbers, 2016).
Line of credit:
It is an arrangement between customers and financial institutions include bank and
others. Such arrangements allow customers to borrow maximum amount from the banks and
financial institutions. The benefits of line of credit is that it allows the borrowers access to the
borrowed funds at any point of time provided that the borrower has not exceeded the maximum
limit as per such arrangement. Benefits of line of credit include adjustment of repayment by the
borrowers and low rate of interests. Disadvantages of line of credit arrangement include that the

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FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING
facility of borrowing is only provided to the existing customers of the banks or financial
institutions (Connolly, La Cava & Read, 2015).
Honeymoon rates:
The honeymoon interest loan is a product that offers borrowers loan at very low rate of
interests as compare to other home loan products. Such low rate of interest on home loan is for
very short duration of period and not for the entire term of the loan. The advantages of
honeymoon rate loan is that for a fixed period of time the rate of interest on loan is very low. The
disadvantage of such loan product is that the rate of interest is significantly high after the period
to which the low rate of interest applies.
Considering the merits and demerits of 4 different loan products in the above it can be
suggested to the potential first home buyer to use no frills loans to buy his her desired home. It
has been assumed that the potential buyer is not a professional while recommending a suitable
loan product for the person.

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FNS40815 CERTIFICATE IV IN FINANCE AND MORTGAGE BROKING
References:
Aalbers, M. B. (2016). The financialization of home and the mortgage market crisis. In The
Financialization of Housing(pp. 40-63). Routledge.
Connolly, E., La Cava, G., & Read, M. (2015, June). Housing prices and entrepreneurship:
Evidence for the housing collateral channel in Australia. In Small Business Conditions
and Finance, Proceedings of a Conference, Reserve Bank of Australia, Sydney (pp. 115-
144).