Low frills

This is your basic home loan.
You have the option of making monthly, fortnightly or weekly repayments, with no penalties if you repay the loan early.
You can make additional repayments at any time.

Some banks may have a monthly service fee.

You may even be able to ‘redraw’ your surplus funds, for any worthwhile personal purpose.

This loan is suited to owner occupiers and investors.

Investors even have the choice of making interest only repayments for the first five years of the loan. After this the loan will revert to standard loan repayments.

Offset home loan

The offset home loan is a Principal and Interest housing loan account. It is linked to a standard cheque account that operates as an offset account.

The transaction account does not earn any interest.

The way that this account saves you time and money on your home loan is that whatever the balance of your transaction account, the equivalent amount in your home loan, does not attract interest. An example, is that if you had $5,000 in your cheque account, then $5,000 of your home loan balance would be interest free.

You can still make monthly, fortnightly or weekly payments, as well as make additional repayments. You can also have the payments deducted automatically.

Redraw is also available on this account.
A monthly service fee may apply.

This loan can be used for owner occupiers or investors.

Fixed rate home loan

As the name implies, this type of loan has a fixed interest rate for a specific term. Normally up to 5 years.

You have the option of making interest only repayments during the fixed term, or standard principal and interest payments. This type of loan is commonly used for residential investment purposes.

Some banks will even allow you to pay your interest one year in advance, for a reduced interest rate.

A monthly service fee usually applies to this type of loan.

A penalty may also apply if you break the fixed period. Ie. Repay the loan within the fixed term.

At the end of the fixed rate term you have the option of fixing the loan for another term, or converting to a standard home loan.

Equity line

Also known as a line of credit.

The easiest way to explain this type of account, is to think of it as a credit card. You are given a limit, normally up to 80% of the value of your home, where you are able to use the funds at your own discretion.

This type of account is useful if you wish to consolidate your debts, whereby you reduce the monthly repayments you need to make.

You are only required to make interest only repayments to the loan. Usually you would have your salary credited directly to the loan and this amount would act as your loan repayment.

Another way to operate the account, would be to have a credit card available to pay all your bills with, including shopping, and then once a month you would arrange to have the balance of the credit card cleared in full. This way you would be maximizing the amount of time your salary remains in the account, saving you interest on the loan.

This account can be used for investing.

Access to the account would be via ATM, internet or cheque book.

Introductory rate home loan

Most banks advertise a discounted 12 month interest rate. This is a low rate that is charged for the first twelve months of the loan. Once this term has expired, the loan will require normal monthly repayments calculated at the standard home loan rate.

This type of loan is great for the money conscious, where you are trying to save as much as you can in your first year to be able to do improvements to your home.

The downside, is that once the ‘honeymoon’ rate has expired, your repayments will increase.

At this stage, it would be advisable to reassess your position, and maybe convert the loan to a Low Frills home loan. A bank service fee may apply.

A monthly service fee may also be applicable.

Redraw is available on this loan.