The huge selections of home loan packages available today have all been named and bundled with different features, benefits, interest rate, conditions and fees. Most of them will fall into one of the categories listed below.
Fixed Rate Home Loans
This type of loan has a fixed interest rate for a certain period of time, most often between 2 and 5 years. Once the fixed rate period ends, customers may be offered another fixed rate period or the rate will convert over to a Variable interest rate, which can rise and fall.
Basic & Standard Variable Home Loans
A loan with a variable interest rate means that the rate will fluctuate during the loan term. As interest rates rise and fall, as set by the Reserve Bank of Australia, so will the interest rate on your Home Loan. Standard variable home loans usually offer more features than the basic variable home loan- such as being able to make extra payments or being able to redraw money from the Home Loan than the Basic Variable.
Line of Credit
Lines of Credit home loans allow you borrow against the equity in your home, at an interest only variable rate. This may enable you to; for example, invest in shares or managed funds, investment property, or home renovations.
"Lo Doc" Home Loans
This type of loan assists customers who do not have the full documentation normally required for a traditional "full doc" home loan. The Lo Doc loan normally assists the self-employed, people that may have had credit difficulties in the past, or people who do not have enough documentation for 'full doc' home loans.
Split Home Loans
Combines different loan types into one Home Loan. For example some loans allow you to have one portion of your home loan at a fixed rate, and another portion on a variable interest rate. Another example would be a fixed rate home loan and a line of credit. Some loans allow for multiple splits.
Consolidation Home Loans
(Refinancing your existing Home Loan and paying off other debt- such as credit cards or personal loans.) Putting a package together that puts all of your debts, including your mortgage and other debts, into one home loan. This can be beneficial as credit card interest rates for example, can be much higher than your home loan interest rate.
Interest Only Home Loans
This type of home loan allows customers to make payments in the form of interest only. This means that no payment is put toward the principal balance of your home loan. Many people see this as a good option to keep their payments at a lower level while speculating that their property value is going to increase.
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