Repayment structure Advantages Disadvantages Table loan • Can set up to 30 years with most lenders, which helps you stretch out your repayment amounts • Can plan and budget for repayments • Can be fixed or floating interest rates or a mixture of both. • Little flexibility with repayment options Revolving credit loan • Can pay less interest because all your income is automatically paid into the mortgage and interest is calculated daily • You can easily make extra repayments • No fixed repayments means you must be disciplined to not keep withdrawing funds up to your credit limit Reducing loan • You often end up paying less interest because you start paying off principal quite early in the loan period • Suits borrowers who expect their income to fall in the future, so they want to pay more up front • You may end up paying more interest in the short/medium term because you have higher initial repayments • The initial payments are generally higher than under a table loan structure Interest only loan • Because you’re not paying principal, you can free up cash for other things • You still need to repay the loan amount after the interest-only period has expired
Home Buyers Finance Guide V2
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