Question

[Kaileysmum]

Hi
We currently have a standard variable rate home loan (7.82% now with the rise), We owe 101,000 and the house was valued at $152,000 in May this year.

Since getting the home loan we had to buy a better car as ours died, we got finance thought esandra for the car. We now are thinking it would be easier to put the car into the home loan so we are only paying one payment and so we can pay more off the home loan. Also we wanted to borrow some money as well to redo our bathroom.

So I was wondering what would be the best way to do it, or if its a bad idea?
Do we just refinance our loan and keep the same type of loan? Someone has suggested we should just get a line of credit loan, so we can do our Reno’s, are these a bad idea?

I’m so confused with all the different type of loans, and I don’t want to ring the broker and feel pushed into something when I don’t know what’s the best option.

Thanks Heaps :o

p.s. Also with the loan we have we have to pay a facility fee every year, is that normal, as I mentioned it to my sister and she said they don’t pay that, I just thought it was normal.

[andie_pandie]

Hi Kaileysmum

With regards to the car loan if the value of the car loan is not to much you may have enough room to add this to your current mortgage. One thing to try and do is pay close to what you have been already on the car however this time into the mortgage so that you pay the car loan part of the loan off sooner at a lesser interest rate. If you pay the minimum home loan repayment then effectively it will become a expensive car as it will be taken over the whole loan period.

With bathroom renovations, you may need to get quotes so that the property can be valued with these quotes, the downside is that the bank will probably only pay on invoice and progress draw these. This may increase the value of your property hence allowing additional money for the renovations. If you do get quotes please make sure that they are fixed quotes as you do not want to come up short when time comes to pay.

For a Line of Credit you generally need plenty of equity in the loan first. A lot of people do not really understand how to use this product correctly. The danger of this product is you can end up spending more than what is coming in and be unaware of this. The best way to describe this product is to imagine one very large credit card with a balance of say in your case $100K, the aim is to get it to $0. Basically all your money goes into this account and you also live out of this account. It is interest only and it is up to you how much principal you pay. At least with a normal principal and interest loan ie fixed or variable it is a reducing loan hence you know that you will pay it off in the specified time.

I'm not sure what bank you are with so I can not comment on the facility fee, it sounds like it may be a package fee generally these are taken when you are wanting additional products associated with the loan, and you pay a annual fee also if you purchase other property these can run off the same package.

If you are wanting further info related to your particular bank (if they are on my panel) then let me know via PM, if you can give me also a idea on the Esanda loan amount this will help also.

Kind Regards


Andrea

[Kaileysmum]

Thanks so much for the reply, I have PM'ed you.