Standard Variable Rate
This is often known as the ‘benchmark rate’ and will traditionally move up and down with the Reserve Bank interest rate adjustments. It is a ‘full feature’ loan that allows for maximum flexibility including additional repayments, redraw and loan splitting.
Basic Variable Rate
Often referred to as a ‘No Frills’ loan, the basic loan provides a cheaper variable option for borrowers who don’t require many special features.
Fixed Rate Loans
This is where you ‘Lock in’ your rate for a defined period so that you avoid possible future interest rate rises. Although you have the security of knowing your monthly repayments will not increase, you do not enjoy interest rate reductions that occur during your fixed period.
Combination or split rate
Who says you can’t have the best of both worlds? Many institutions allow you to split your loan so that you can have some on fixed interest on some and variable.
Low Documentation loans, more commonly known as ‘Lo Doc’, are designed for self employed people who may struggle to obtain all the normal documentation required to verify income. Because these loans have less stringent approval criteria, they typically attract a slightly higher interest rate.
Do you have a bad credit history? Many ‘Non-conforming’ lenders will often help where the banks won’t, although the rate of interest charged is usually higher.
Also know as ‘Lines of credit’, these are interest-only loans with a set ‘limit’ available for drawdown at the borrower’s discretion. Perfect for minor home renovations or share investment.
An Offset loan is where a every day transaction account is linked to the loan account. Any funds held in the transaction account are automatically offset against the loan balance, thereby saving interest. The more in your account, the greater the saving.