Other home loan options include:

Mortgage offset account and redraw facility

The way it works is that your mortgage is linked to a savings account (for example, an account where your salary and other cash might be deposited). You also use this account to withdraw from when bills are payable. There may be some types of offset accounts where you have to move your money into a transaction account before accessing that money. But for as long as the money sits in the account it is ‘offset’ against your home loan (effectively acting as an additional payment towards reducing the debt owed on your home loan) and this can reduce your interest bill on your loan.

A redraw facility can operate in a similar way to an offset account meaning you can apply payments to your loan, (which means the balance on which interest is charged is lower) but still be able to draw back any or all of any early payments made. However if you have a home loan for an investment property it may be easier for taxation purposes to have an offset account. You should discuss the best option with your accountant or financial adviser.

Non-conforming home loans

Non-conforming home loans are for people that don’t fit into a mainstream lender’s approval criteria. This normally includes people with a poor credit history.

With a non-conforming home loan, you will pay a higher interest rate. But once you establish a history of regular and on-time loan repayments over a two-to- three year period you can often refinance your mortgage with a mainstream mortgage provider and switch from a non-conforming home loan.

Reverse mortgages

Reverse mortgages allow you to borrow money against your home, without having to make regular payments. These mortgages are designed for older home-owners (i.e. 60 years and over) to release the equity in their homes and gain access to extra cash. The amount of money borrowed through a reverse mortgage (the interest accrued over the term of the home loan) is paid when the property is sold or when all borrowers cease to live in the property or pass away. It is very important to understand how a reverse mortgage will affect your financial position in the long term.