HOME LOANS
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A home loan, otherwise known as a mortgage, is a smart way to secure the money you need to get the home you want. Whether you’re aiming to buy a property, build something new, refinance your current home, or renovate an existing property, a home loan can help you to achieve those dreams.
In Australia, home loans usually have a 25 or 30-year term. You make regular repayments, often on a monthly basis. A variety of home loans are available, with different options to suit different circumstances.
Types of home loan
The right home loan depends on your situation and personal preferences. Some loans are a combination of more than one type of loan.
Variable rate
The interest rate changes with a variable rate home loan Your repayments vary because of this. Variable-rate loans offer more flexibility and can have a higher interest rate than other types of loans.
Fixed rate
A fixed-rate home loan lets you lock in a fixed interest rate for a set period, usually between one and five years. After this period your rate normally reverts to being variable, unless another fixed-rate term is agreed with the lender.
Split rate
Split rate home loans combine variable and fixed rates. You pay a fixed interest rate on a certain portion of your loan and a variable rate on the remainder.
Principal and interest loans
With this type of home loan, you pay off both the interest and the loan amount throughout the loan period.
Interest-only loans
With an interest-only loan, you only pay back your interest for a certain period, usually the first few years. The loan then reverts to being a principal and interest loan. This can mean lower repayments at first but ultimately can be more expensive than other loans.
Owner-occupier loans
Owner-occupier loans are for when the borrower intends to live in the house themselves. You can sometimes get special discounts, for example, if you’re buying your first home.
Investor loans
Investor home loans are aimed at property investors who plan to rent or sell the property instead of living in it. Both investor loans and owner-occupier loans can have fixed, variable, or split-interest rates.
Choosing home loans
Choosing the right home loan can be challenging. It’s important to shop around and compare different options from a variety of lenders. Everyone is different, so think about what suits your circumstances to help you find your ideal home loan.
