TYPES OF LOANS

Types of Loans | Loan Features | Purchase & Loan Costs

Standard Variable Interest Rate Loan
This loan is the most common amongst borrowers. The interest rate is variable and can move up or down, therby adjusting your repayments. This loan offers more flexibility than other loans as you can usually make unlimited repayments and redraws without penalty.

Basic Variable Interest Rate Loan
A basic loan is also a variable loan but usually offers less features than standard variable loans. Generally there is a minimum amount that can be redrawn and there is usually a fee involved as well. Also these loans generally don't include an offset account.

Fixed Interest Rate Loan
A fixed interest rate loan allows you to fix the interest rate for a period of time, generally between one and five years, but with some lenders seven, ten and even fifteen years. After the fixed term, the loan usually reverts to the standard variable rate on offer at that time or you may choose to refix the loan for another term. The repayments on a fixed loan do not change during the fixed period and provide customers with certainty about their repayments. If you decide to sell your home whilst on a fixed interest rate, a penalty will generally apply.

The Line of Credit Loan
These loans are extremely flexible and are similar to a credit card with a large limit. You can repay as much as you want and redraw as much as you want. With this loan it is important to budget appropriately so that you repay more than you redraw otherwise you could end up owing the same amount for a long period of time.

Low Doc/No Doc loans
Low Doc or low documentation loans are for the self-employed who don't have the documentation required to get traditional home loans. Interest rates on these loans have been decreasing significantly in recent times and is now closer to the interest rates offered on standard loans. Generally, mortgage insurance is payable on these loans if the LVR is greater than 60%.