Homeownership is an important aspiration for most of the Australians, an inevitable part of this aspiration is home loan as most of the people relies on home loan to fulfill their desire of first home. In Australia, home loan products are among the largest portion of lending which offers great flexibility and a multitude of features. Some of the popular home loan products include:

Standard variable rate loans:

This is the most popular type of loan in Australia. In this loan type, the repayment will vary throughout the loan term. If the interest rate goes up, the borrower has to pay more, and if the interest rates drop, the repayments also drop. This loan type features offset, top- up, and redraw facility which allows borrowers to make an extra repayment to pay off the loan faster.

Fixed-rate loans:

A fixed rate home loan lock the borrower’s interest rate and repayments for a set period, usually one to five years. It gives certainty of what your repayments will be over the loan period. At the end of the fixed-rate period, the customers have a choice whether to keep the rate for another set of periods or switch to a variable rate or split rate for another few years. There are some break fees or exit fees if you want to break your fixed-rate contract. There are advantages and disadvantages of fixed interest rate home loans which entirely depends on your situation. If you planning to have a family and bounded for other financial commitments, then fix rate may suit you.

Split or combination loans:

Split or combination loans allow borrowers to combine their loan structure as fix rate and variable rate. It provides more freedom and flexibility offered by the variable rate loans and certainty of repayment offered by the fixed rate loans to the borrower. Split rate loan is one of the best home loan products as it impacts your monthly repayment. You can use the loan calculator to determine and estimate how it will impact your repayment or you can consult with the broker or lender to get this loan product and get maximum benefit.

Home equity loans:

A home equity loan is the overdraft facility offered by the lenders. In this loan product, the credit lenders will allow you to access the equity amount you’ve built up in a property up to your maximum credit limit. It is also called a line of credit which is secured by a registered mortgage over a residential property. In this product, the interest is charged on the amount that you have used not the entire credit limit. This kind of home loan product is suitable if you are planning to take a loan for an investment property, home renovations, buying a car, investment in shares, and the like.

Low-doc and no-doc loans:

Low-doc and no-doc loans are the loan type that requires minimal evidence and adheres to higher complexity for lenders to meet the NCCP Act and making a reasonable inquiry about borrower’s financial situation. Most of the lenders will take into consideration of extra collateral or guarantors. These types of loan may be regulated or unregulated by NCC (National Credit Code) depending on the loan applicant’s situation. Most of the self- employed individuals and business owners who are unable to get payslips or up to date tax return seek this type of loan if they are unable to meet the responsible lending obligation.