BASIC VARIABLE RATE HOME LOAN
Basic Variable Rate Home Loans as the name suggests are very basic home loans with lower
interest rate but with less features than a standard variable rate home loan. This type of loan
generally has no ongoing monthly fees. As with all variable rate home loans the interest may
be increased or decreased according to the market. Basic variable rate home loans suits
budget conscious customers.
STANDARD VARIABLE RATE HOME LOAN
Standard Variable Rate Home Loans are the most popular type of loan. This type of loans are
linked to the official Reserve Bank rate thus depending on rates going up or down your
repayments will go up and down. Standard Variable rate home loans are flexible and may
include optional features such offset, the freedom to make extra repayments, to redraw funds
or split your loan. This type of loan might allow to incorporate an introductory discounted
rate. Introductory rates are usually effective for the first 12 months of the loan, at which it
then reverts back to the standard variable rate
FIXED RATE HOME LOAN
Fixed Rate loans as the name suggest is a loan with fixed interest rates for a set term. You can
choose anywhere from 6 months to 15 years to have fixed rate home loan. Please note if the
Reserve Bank drops interest rate, fixed rate home loan does not allow the reduction of
repayment amounts. These loans can be combined with variable rate products to provide a
mix of security and flexibility. You can have half of your loan as standard variable loan and
the other half as fixed.
INTRODUCTORY RATE OR HONEYMOON RATE HOME LOAN
Introductory Honeymoon Home Loan offers a low-interest rate usually for the 1st year of the
loan. With this type of loan, you can have your rate as fixed, variable or capped.
Please note with Introductory Honeymoon Home Loan if interest rates rise your rate will not go up, but if interest rates fall that rate will go down, and you will benefit.
The other advantage of this loan is that it offers borrowers a chance to reduce the principal quickly by making extra repayments.
The disadvantage of this loan is once your Introductory or Honeymoon
a period is finished the interest rate usually reverts to the standard variable rate and most banks
charge a slightly higher rate after the introductory period.
A Fixed Rate Lock allows customers seeking a guaranteed fixed interest lending rate to
protect against potential interest rate increases that may occur during their settlement period.
This type of loan allows you to put a rate on hold for you for between 60 and 90 days. Some
lenders charge for this feature and others offer Rate Lock for free.