Home Loans with Variable Interest Rates – Most Common

Preferred by most first home buyers. These loans have repayment periods up to 30 years.

Advantages

  • Regular monthly, fortnightly or weekly repayments
  • Redraw - most institutions will allow you (subject to terms and conditions) to withdraw additional repayments you have made over and above the minimum repayment.
  • It may have the ability to offset credit balances held in other accounts at the same institution against the principal of the loan.
  • Any extra repayments are welcome at any time

Disadvantages

  • Variable interest rate which means the loan will be subjected to any interest rate fluctuations in the market
  • The interest rate is always higher than Low Frills Home Loan rates.

Basic Loans - Lower Interest Rates + No Extras – Most Popular Low Frills Loan

Has the lowest running costs and does not include any extras such as credit cards and joined accounts to loan.

Advantages

  • Regular repayments help you with budgeting.
  • Lower interest rate.
  • Extra repayments are usually allowed.

Disadvantages

  • Variable interest rate which can be affected by fluctuation
  • Loan redraw may not be available

Fixed Term Home Loan with Fixed Interest Rate

For a period of time your interest rate is set so you know what your repayments will be for that fixed rate term

Advantages

  • If the interest rate rises you will be safe for that set period
  • Regular repayments

Disadvantages

  • You may pay more if interest rate drops in that set period
  • Most lending institutions penalise you for making additional repayments.
  • You may be penalised if you pay off your home loan before the due date.

Split Loans - Fixed & Variable Interest Rate – Cautious Choice

Having a split loan means that part of the loan is fixed and part is variable

Advantages

  • If interests rate rises you are protected at the fixed rate
  • If interest rate drops you are not vulnerable in having to pay more
  • Additional payments are allowed on the variable portion of the loan.

Disadvantages

  • With interest rate fluctuations you may not benefit greatly
  • You may be charged set-up fees, account fees and discharge fees on both the fixed portion and the variable portion.
  • You may be penalised for making higher repayments on the fixed portion.
  • You may be penalised if you pay off your loan before the due date on the fixed portion.

Lo Doc Home Loans, for the Self-Employed

Takes the stress out of borrowing money as you can “self-certify your income,

Advantages

  • No need to provide financial documentation to the lender
  • Access to your loan and greater flexibility.

Disadvantages

  • Higher interest rates and fees.
  • You may be at risk of over committing yourself if your income varies.