Basic Variable Loan
Basic variable loans typically offer a low interest rate with no ongoing fees. They generally have fewer features than the standard variable loans. Interest rates and repayments will vary throughout the loan term.
Fixed Rate Loan
Under a fixed rate loan, the interest rate is fixed for a specified period, usually between one and five years. This loan gives you the certainty of knowing exactly what your monthly repayments will be and peace of mind knowing the repayments won’t rise during the fixed rate term. However you won’t benefit if rates go down during the fixed term. There can be high penalties if you break the loan contract during the fixed rate period.
Introductory Rate (Honeymoon)
An introductory rate loan generally offers a guaranteed low rate for an initial period of time (usually 12 months) after which most will revert to a higher standard variable rate. The rate can be fixed or variable.
A bridging loan may be necessary to cover the financial gap when buying one property before your existing home is sold. This finance is generally secured against both your properties while you are in the bridging phase. Usually, bridging loans are short term.
Self Managed Super Loan
Self-managed super fund (SMSF) loans are home loans offered for Australians who wish to invest their superannuation in property. An SMSF loan can offer certain tax benefits so are attractive to some investors or borrowers. The rules and regulations surrounding SMSF borrowing are complex. Potential borrowers are strongly encouraged to seek qualified financial, tax and legal advice before taking out a loan.
If you are building your own home or investment property, a construction loan may be suitable for you. This loan requires a fixed price building contract from a registered builder. These loans are usually interest only for the period of the building and then become principal and interest once building is complete. A construction loan allows you to draw money as is required while building. Also, with the usual necessary documents required when applying for a loan, construction loans also require a ‘fixed price building contract’ and ‘council approved plans’.
Standard Variable Loan
Standard variable loans are Australia’s most popular type of home loan. These loans generally offer excellent flexibility, low fees and often offer great features such as an offset facility, redraw facility, no limits on additional repayments and no early pay-out penalties.
An offset account is a day-to-day transactional account, which is directly linked to your home loan. Any balance in the offset account is 100% offset against your home loan. Therefore interest on your home loan is charged at the difference between your home loan balance and your offset account balance. This reduces the amount of interest you have to repay, making your money work harder for you.
Portfolio Loan is a flexible line of credit that combines your personal and investment finances into one facility. This enables you to put your equity to work by allowing convenient access to a range of loan and repayment options. You can usually establish as many as 10 sub-accounts in your Portfolio. Each sub-account can have its own purpose, with the ability to cancel existing sub-accounts and open new sub-accounts as your goals and priorities change.
Loans required to purchase commercial property have different terms and features than those for residential property. The loan term is usually shorter. Loans can be variable rates or fixed, and for owner occupied purposes or investment.
Line of Credit Loan
A line of credit provides you with access to the equity in your home or investment property up to a pre-approved limit. You may access the funds as you need to. The interest rate on a line of credit loan is usually a variable rate and repayments are interest only. Some lenders allow you to capitalise the interest without having to make an actual repayment.
Low Doc Loans
A low documentation loan is suited to self-employed borrowers who are unable to fully verify their income by way of up-to-date tax returns. These loans generally come with a higher interest rate.