Trying to understand the types of home loans Australia and available features, can be overwhelming and confusing! Don’t worry, let me explain.
Home loan terms are generally 30 years, although some may be 25. Shorter loan terms will mean higher repayments, but you will pay less interest.
Principal and interest loans are the most common. Regular repayments pay the interest and part of the amount borrowed (principal). You will pay off the loan over the agreed period (loan term). Lenders may offer an interest only repayment for an initial period.
Interest is always calculated daily on the balance of the loan.
Home loans with more features often come at a higher cost. Work out what you can afford and avoid paying for options you don’t really need.
Compare features of home loan options such as:
- Interest rate (per year) as advertised by the lender.
- Comparison rate (per year). The single figure cost of the loan including the interest rate and most fees.
- Monthly repayment. How much you will pay each month on the loan.
- Application fee. One-off payment at the start of a loan. (Establishment, up-front or set-up fee)
- Ongoing fees. Fees charged every month or year. (Administration or service fee)
- Loan term. Length of time your loan lasts.
- Loan features. Offset account, redraw, line of credit, interest only and their fees.
Your mortgage broker will help you through this process.
It is important to do your best to understand the types of home loans available to you in Australia, and to know what you need. Each loan type and feature noted below has been explained in as simple terms as possible for you.
Simply click on the links below and start learning.
Types of home loans:
- Variable Home Loan
- Fixed Home Loan
- Split Home Loan
- Introductory/Honeymoon Home Loan
- Line of Credit Home Loan
- Construction Home Loan
- Bridging Home Loan
- Low Documentation Home Loan
- Credit Impaired Home Loan
- Equity release/Reverse Mortgage Home Loan
Different home loan features:
- Interest only
- All in One
- 100% Offset