Common Loan Types Explained
These days there are a wealth of options when it comes to home loans – hundreds in fact – from basic variable loans, to split loans and reverse honeymoon loans.
In this section we will introduce some of the most common mortgage types to help you understand them. This introduction is not meant to be used solely to decide which loan best suits you, it’s more to give you a picture of what’s available – our mortgage consultants have the experience and expertise to, together with you, find your best loan match. We will also take the time to sit down with you to ensure you understand everything about the loan type you are seeking.
Basic Variable
This is about as simple as it gets when it comes to home loans, which probably explains why the basic variable is often called a ‘no-frills’ loan. These loans generally offer the lowest interest rates, which are variable, but can be light on features. Read more >>
Standard Variable
This loan type is a step up from the basic variable loan, and is very popular. As the name indicates, they have a variable interest rate, meaning it can fluctuate up and down, generally in line with changes to official interest rates as set by the Reserve Bank of Australia (RBA). Read more >>
Fixed Rate
While variable rates have historically been the most popular choice for Australian borrowers, many home buyers turn to fixed rates in uncertain economic times. Others choose to fix their rates simply to secure their mortgage repayments and provide financial certainty for a specified time. As the name suggests, this loan type involves locking a mortgage into a fixed interest rate for an agreed period - usually one, three or five years. Read more >>
Honeymoon Loan
These are also known as ‘introductory’ or ‘special offer’ loans, and are a key marketing tool in the highly competitive Australian mortgage market. Honeymoon loans offer borrowers a very low interest rate, usually set for the first six to 12 months of the loan, although some lenders have extended terms to several years. Read more >>
Low doc Loan
Deregulation of Australia’s financial system since the early 1980s has brought major changes to the mortgage market, and low doc loans are among the most significant. Low doc (short for ‘low documentation’) loans have made property ownership possible for many people who would otherwise have been denied the opportunity. These people include self-employed, seasonal employees who regularly change jobs, contract workers, investors, or people who earn commissions. Read more >>
