Bank West

No problems with your boss, you can work the hours that you like and you're in charge of your own Christmas party. Being self employed has many benefits, but when it comes to applying for a home loan it can be difficult to provide the proof of income that banks require.

A low documentation loan such as BankWest's Easy Doc Loan means that if you are eligible, you don't need to spend hours sorting through pay slips and financial statements to prove your serviceability (which means your ability to make regular repayment on your home loan). With an Easy Doc loan application, your loan could be approved with as little as a signed declaration of your income.

Generally, less documentation equates to more risk for the bank, so many Low Doc products offer fewer features and stricter limitations than standard loans. For example, with BankWest Easy Doc, a redraw facility is available but with a minimum amount of $1000. The application fee of $700 is considerably higher than other BankWest loans, and higher than many other similar low doc products offered by other lenders.

The convenience of low documentation loans means that the interest rate payable is higher compared to other loans on the market, but the BankWest Easy Doc loan switches to the lower rate Lite Home Loan after three years. Bear in mind though that even this little home loan rate could be higher than the rate offered by other non-bank lenders.

BankWest's Equity Access loan offers a range of features, allowing home owners to borrow against the proportion of their home that has already been repaid.

Bank West offer the option of weekly, fortnightly or monthly repayments, a redraw facility with no fees or minimum withdrawals required and no application fee for the loan itself. The extra cash flow from Equity Access can be used for anything from home renovations, such as adding a pool to your block, to taking holidays, paying off other debts or buying a new car or boat.

Sounds like a dream loan, right? Always do your homework before committing to any one particular loan.

Be sure to check out the risk associated with a loan like BankWest's Equity Access. For example, this type of loan means that you are using your home as security, so always be sure you can make the regular repayments as required.

The number of features offered to borrowers with the home equity loan may be outweighed by the huge long term commitment required, as the minimum loan term for BankWest Equity is 30 years. When you think of it that way, the convenience of having that extra cash to buy a new car may not seem like such a great deal when you're paying the loan off for decades.

Problems with home equity loans can crop up when home buyers are taking equity out of a growing asset, their homes, and transferring these funds into holidays and cars which don't appreciate in value.

Although there are no application fees for BankWest Equity Access, an annual account maintenance fee of $325 is payable in advance. Multiply that by the minimum loan term of 30 years and an application fee suddenly doesn't seem like such a big deal, right?

BankWest Equity Access loan is a line of credit loan which allows borrowers to release the equity they have built up in their homes. The loan is convenient for borrowers as it can be used as an everyday transaction account, with ATM and cheque access. This may be perfect for borrowers needing a boost in cash, but the reasons for needing access to the equity should be worthy, and not create debt problems down the track. You should always speak to your financial broker to find the best solution for your situation.

You should read the fine print on "lite" products in the supermarket, and the same rule applies with "lite" home loans. A loan with an attractive interest rate, for example, may lack the features and flexibility of other loans.

Bank West's Lite Home Loan promises to be simple and flexible.

With their Lite Home Loan, you can borrow up to 95% of the value of your property. You have the flexibility of choosing from weekly, fortnightly or monthly repayments, so you can adapt your repayment plan to suit your income. The application fee can be refunded if you choose to stick with the loan for three years.

These are all useful features of a loan, but before signing up to anything, try to evaluate the loan from all angles. For example, by borrowing 95% of the value of the property, you are likely to need to pay a large amount for lenders mortgage insurance. This adds to the overall cost of your loan, so it's a good idea to look into what's involved. Once you add up the cost to you, the loan may not appear to be so "lite".

Also, once you take into account the huge sums of money you are likely to pay in the long term with your home loan, a $500 application fee refund three years into your loan will seem like a mere drop in the ocean of your finances. Over the term of your loan, $500 may be easily dissolved by various fees and charges along the way. So don't use this refund as your main incentive to sign up.

Bank West offer access to surplus funds in the form of a redraw facility. It's worth reading the fine print though, as a minimum redraw of $1000 applies and depending on how you make the withdrawal, additional fees may apply.

The Lite Home Loan page of Bank West's website offers a 7.15% per annum variable rate with a comparison rate of 7.16% per annum. While this comparison rate is based on a loan of $150,000 for a term of 25 years with the $500 application fee refunded after three years, it fails to take into other borrowing amounts, account redraw fees, early repayment fees and other government and bank fees that may apply.