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A standard variable rate home loan is one of the most common mortgages in Australia. For many borrowers, a standard home loan offers the right mix of features, flexibility, interest rate and fees.
This type of loan is particularly suitable if you want to make extra repayments without penalty, split your loan or access a line of credit. In return for these benefits, a standard variable rate mortgage will have a higher interest rate than a basic home loan.

Features

• repayment flexibility
• ability to make additional repayments
• redraw facility
• offset feature
• split loan feature
• portability
• may offer direct deposit salary, rental or dividend income,
• credit/debit card and line of credit facility
• can be used for building purposes
• higher interest rates

Basic variable rate loans are sometimes referred to as the ‘no frills’ alternative to the standard variable rate loans. The interest rate is lower than a standard variable loan, making them attractive to the budget conscious borrower wanting a lower variable rate but with fewer features. Popular with First Home Buyers.

Features

• lower interest rates
• lower ongoing fees
• minimal features
• owner/occupiers only in some instances

Fixed Rate Loan

Fixed rate loans are funds lent over a set term at a set interest rate. This gives the borrower the certainty of knowing exactly what their monthly repayments will be should their circumstances change. Some lenders may impose early repayment penalties if you make a lump sum reduction to your loan or you pay the loan out in full. However a fixed rate loan is ideal in a rising interest rate market as this guarantees you of your interest rate and repayments for a set time.