Home loan types

A standard variable loan is one of the most common and popular type of home loan in Australia. The loan’s interest rate is variable, which is based on the official rates set by Reserve Bank of Australia. There are several advantages of having a standard variable loan. One is it is flexible and it can be bundled with added features, the most popular being an offset account. Your interest rate will also go down when interest rates fall and most lenders will allow you to have access to line of credit facilities. However, on the down side, when interest rates go up, your repayments will increase too.

A Honeymoon loan allows you to have lower initial payments for a certain period of time, usually the first year. You will be given a lower interest rate for that period. The interest can be fixed or variable and is guaranteed to remain low during the honeymoon period. The loan will be transferred to a standard variable rate after the discounted stage.

A Basic variable loan is a type of loan that typically offers lower interest rates than a standard variable loan. In exchange for lower interest rates, it has less features and flexibility. You need to pay for any additional feature that you might require.

A Fixed rate loan is perfect for borrowers who want to know how much exactly they are going to pay. Typically, they don't want to be exposed to interest rate changes. Repayments stay the same even if interest rates rise. A Fixed rate loan allows you to have a fixed rate for a specific period, usually one to five years. During this period, the disadvantage is you can’t have lower repayments like others when interest rates fall. You also might have to pay penalty fees if you want to make additional payments.

A split loan, or sometimes called a ‘combination loan’ is a mix of fixed and variable rate loan accounts. This can be a good way to ‘hedge’ interest rate risk, and provide a mix of repayment certainty with the redraw flexibility most borrowers want.

A Line of credit loan allows you to access the equity in your home or property up to a certain pre-approved limit. You can draw a line of credit as you need money and only pay interest on the used amount. One of the advantages of a line of credit loan is interest rates are usually lower than the standard personal loan. You can also have the flexibility of withdrawing the money just when you need it and thus lowering your repayments.

A Construction loan is a type of loan, which allows you to draw amounts for each building stage and only pay for interest repayments at the time of construction. Having a construction loan will give you interest savings because unlike other loans that you get as a lump sum, you only draw money as you need it.

A Low-doc loan is for borrowers who can’t comply with the requirements of a regular loan, such as people who are self-employed or have impaired credit history. This type of loan is also popular with those who want to borrow more than 100% of the value of the property. Low-doc and self-employed loans are flexible loans, which can have several features like line of credit, variable or fixed rate options, redraw, etc. The only downside to this type of loan is usually it has a higher interest rate.

Self-Managed Super funds (SMSFs) are incredibly popular these days. One of the benefits of an SMSF over a conventional super fund is the ability to borrow to purchase investment property. Luxe Financial are accredited for SMSF loans with several lenders.

Don't want to wait to get your first home? You can buy home sooner rather than later with a no deposit loan. A No deposit loan allows you to borrow 100% of the property purchase price. Although lenders today are a bit reluctant to offer no deposit loans after the global financial crisis, it's still possible and there are several strategies to pull off a no deposit loan. Luxe Financial’s mortgage brokers can help you get the dream home with no deposit. Call us to find out how!

If you don’t have enough savings for a deposit, a guarantor loan allows you to borrow 100% of the property price. Most banks and lenders accept a guarantee from your parents, but it is also possible to have it from a spouse, sibling, or grandparent.

A non-resident loan allows foreign nationals and temporary residents to apply for a loan and buy properties in Australia. Today, non-resident loans almost offer the same features as regular home loans, although you might need to secure approval from the Foreign Investment Review Board (FIRB).