Secured loan, equity, mortgage, get them working for you!
IS A MORTGAGE A SECURED LOAN?
Interest rates are more often than not cheaper than unsecured loans as the lender holds the right to recoup costs or the asset if the repayment terms are not met.
Unsecured loans are exactly what they sounds like, they are not secured to an asset. They are assessed and approved or denied based upon a borrowers credit worthiness rather than an asset. They are also known as personal loans.
WHAT IS A PERSONAL LOAN SECURED BY THE EQUITY IN YOUR HOUSE?
If you own your home and have built up some equity in your house you can use that equity as a security for a new loan.
An equity loan works much the same as other secured loans. The lender will assess your application, mortgage and equity and decide if you can afford to repay the loan or not.
WHAT IS YOUR EQUITY?
The equity in your home is the difference between the value of your home and the debt or mortgage owed against it.
If your home is worth $700,000 and you only owe $400,000 on your mortgage then you would have $300,000 in equity.
Most banks however won’t let you borrow 100% of your home’s value so you will need to take this into consideration when deciding how much of your equity you would like to borrow. You may have $300,000 in equity but lenders will vary as to how much of that equity they will lend to you.
DO I HAVE TO GET MY SECURED LOAN FROM THE SAME BANK AS MY MORTGAGE?
You don’t necessarily need to choose the same bank or lender as your mortgage, however it is the easier option.
You should look into them as your first option as they will have a picture of your lending history already and it will help you avoid having to provide mortgage documents etc.
They also have a vested interest in keeping your business as they hold the mortgage and you will be required to provide details of your mortgage to other lenders to have your secured loan approved.
Jacaranda can also help you pay off your mortgage faster!
WHAT IS A LINE OF CREDIT LOAN?
A line of credit loan or LOC is a loan directly connected to your home loan that you can draw from continuously and at any time, usually at the same interest rate as your home loan.
This is becoming more popular among borrowers as it offers great flexibility as to how and when they use the money from their loan.
The loan is still secured against your home so if you fail to make repayments then you may run the risk of having your home repossessed.
However you are not restricted greatly as to how you spend your loan, you can purchase large or small items at your discretion.
Another positive of the line of credit loan is it is secured to an appreciating asset so you will usually be able to negotiate a pretty competitive interest rate which would probably not be available from an unsecured loan.
However, this is a secured loan that can offer you many benefits. Things you should consider before applying for a secured loan or a line of credit loan:
- Do I need this loan?
- What do I want this loan for?
- Can I afford the repayments?
- Am I financially stable enough for this loan?
If you can’t answer these questions confidently then maybe you should consult with a financial advisor before going ahead with any loans.
Small Personal Loan
Up to 20% Establishment Fee
+ monthly fee up to 4%
Jacaranda Finance does not charge an annual interest rate on SACC loans. These small amount loans incur 'fees' instead of interest. The maximum comparison rate on our loans between $300 and $2000 is 199.43%.WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.
Loan Amount of $1,000 over 12 months repayable weekly (50 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $480 (fees based on 4% per month over 50 weeks) = $1,680 total repayable in 50 weekly installments of $33.60.
Medium Personal Loan
Annual Percentage Rate (APR) starts at 12%
Comparison Rate is 20.56% per annum.
This comparison rate is based on a medium amount credit contract of $2,500 repaid over 2 years with a $400 establishment fee and APR of 48%.WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate
Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $555.83 (reducing interest*) = $3955.83 total repayable over 18 months with weekly installments of $50.71.
Loan Amount of $4,500 over 24 months repayable weekly (104 weekly repayments). $4,500 (Principle Amount) + $400 (Establishment Fee) + $1081.85 (reducing interest*) = $5981.85 total repayable over 24 months with weekly installments of $57.51
Large Personal Loan
Annual Percentage Rate (APR) is 12%
Comparison rate is 19.88% per annum.
Loan Amount of $5,000 over 18 months repayable weekly (78 weekly repayments). $5,000 (Principle Amount) + $1831.16 (Interest) = $6831.16 total repayable over 18 months with weekly installments of $87.57.
Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5041.72 (Interest) = $15041.72 total repayable over 24 months with weekly installments of $144.63.