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Standard Variable

Can pay weekly, fortnightly, monthly. Redraw possible. Extra repayments allowed. May have cheaper interest rate in the first year.

 

An early repayment fee may apply to loans paid out within a specific time when a "honeymoon" rate is taken.

Basic Variable

Low interest rate. Extra repayments allowed. Possible redraw facility.

 

No off-set available.

Fully Featured and Split Loans

Having part of the loan at variable and fixed rates can provide peace of mind. You can manage the variable portion as you would normally.

 

Professional advice required on how to structure the loan. Short term debt may now be taken over a longer period.

 

 

Fixed Loan

Helps budgeting as your repayments are fixed for a period. Some lenders allow you to make extra payments without penalty. Principal and interest payments possible, so loan reduces over

 

Loan can cost more if interest rates decrease. Penalty applies if you break the contract before the end of the term.

Home Loans

 

Here, we will explore the types of home loans that are available and what their features are.

 

Basic variable , standard variable, fixed loan, fully featured and split loans.

Variable Interest Rate Home Loans

Variable interest rate home loans come in two forms, standard variable and basic variable. Both of these variable home loans work in a similar way but the main difference is the interest rate charged and how much flexibility is available. More information about the differences between the basic and standard variable home loans is on our variable home loans page.

A variable interest rate home loan is affected by economic conditions both within Australia and around the world, so you can expect your home loan repayments to rise and fall over the term of your loan.

Variable interest rate home loans Pros

  • Your home loan repayments will fall when interest rates fall

  • You will have the opportunity to reduce your home loan balance faster

  • Can be very flexible and will often allow unlimited additional repayments

  • The average variable interest rate is generally lower than a fixed home loan rate
     

Variable interest rate home loans Cons

  • Your home loan repayments will rise when interest rates rise

  • If interest rates rise quickly, your home loan repayments over a certain period of time may be more than those of a fixed interest rate home loan over the same period of time

  • If you have borrowed at or near your repayment capacity, it is risky if interest rate do rise

Variable Home Loan Differences
 

Basic Variable

  • Low interest rate (lower than a standard variable loan) no frills loan

  • Rate is variable so it moves in line with Reserve Bank changes

  • Limited features (e.g. usually no access to offset facilities & more expensive redraw if at all)

  • Most allow extra repayments

  • Most have terms of 25 or 30 years
     

Standard Variable

  • The most popular type of mortgage

  • A higher interest rate than a basic variable home loan

  • Interest rates can move up or down which will cause your repayments to increase or decrease with the move

  • It is more flexible than a basic variable mortgage thus allowing you to make extra repayments without penalty as well as offering other features

  • Most have terms of 25 or 30 years