Finding the right home loan is just as important as finding the right property.
We look at what features are important to you, recommend a solution, and explain it all in plain English. If you’re feeling overwhelmed by the paperwork, we’ll be right there with you on your home loan journey, from professionally packaging your documents to submitting them for assessment. We’re here to lend a helping hand when you’re feeling lost.
If you’re a first-time home buyer, this may be the loan you’re looking for. Variable home loans start at a lower interest rate and change with the ups and downs of the Reserve Bank’s market index. This means if the interest rate falls or rises, so do your repayment amounts.
Generally, a variable home loan can be flexible, often with the option of making additional payments and repaying your loan faster, low introductory interest rates or redrawing money you’ve already repaid. It’s not a complex loan, but rather a simple home loan for a buyer looking for simple features.
Concerned with the fluctuating market rate? Then a fixed home loan could give you the security you want. Both its interest rate and repayment periods are specified for a certain amount of time, so you can have stability in the early stages before it changes to a variable loan after the fixed term.
Like the variable loan, you can redraw what you’ve repaid and make use of additional payments, but some features come with a price and they aren’t as flexible. However, with the fixed home loan, you’ll be more aware of how much you need to pay back and can budget easily and accordingly.
This is the loan for when you just can’t choose. With a split rate loan, you can make part of your loan attract a variable interest rate and the other attract a fixed rate. The amounts you split are totally up to you.
Split rate loans let you have the best of both worlds—flexibility and security—and it comes in handy when the market is unpredictable. When the interest rate drops, you can hang onto your fixed rate, and when it soars, you can take advantage of it.
With an interest only loan, you only pay interest on the amount you borrowed for a specific amount of time, and when that period’s up, you’ll have to start repaying both the interest and the borrowed amount.
While you may just be paying interest in the beginning, repayments on an interest only loan will cost you in the future. When the interest only period ends, you won’t have much time to repay both the interest and your borrowed amount, so the repayments will be bigger. On the other hand, you could repay higher interest loans in that period, maximise your tax benefits or borrow more cash when buying an investment property.
It’s the ideal loan for a newbie: introductory loans give you a discounted interest rate for six or 12 months before it changes back to the standard interest rate after what we call ‘the honeymoon period’. Your introductory loan will have the exact same features as the loan it’ll become after its honeymoon, so the restrictions are scarce.
If you’re a first-time homebuyer, then the introductory loan could be your easiest option, giving you some extra cash in that first year to decorate or gather yourself together. You just need to make sure you’ll be able to afford that reverted interest rate too!
Line of credit loans work like a credit card or a cheque book, with a restricted borrowing amount you can use either all at once or bit by bit, only paying interest on the money you borrow. Generally, it’s an interest-only loan, and you don’t have a set deadline by which you need to repay the balance.
Line of credit loans are useful when you need money quickly, but also helps to pay for investment properties, retirement plans or debts. It’s the most flexible loan type on the market, so what you do with the money is your choice.
Are you self-employed or a small business operator? Then a low document loan is for you. You probably don’t have a PAYG pay slip, tax returns or other financial statements needed to get the average home loan. To top it all off, it’s possible that your income is unpredictable too.
For a low document loan, you can bring less documentation and still cover the cost of buying a property. They’ve soared in popularity in the last few years and while the interest rates used to be quite high, now the rates are similar to the standard, but your borrowing amounts will likely be limited.