Looking at home loans – what are your options?

· Basic (No frills) Home loan

A loan suitable if you don’t require any added extras. This loan has a discounted variable rate, and will help keep your repayments low and your loan simple.

Repayment options (weekly, fortnightly or monthly); and redraw are features usually available.

· Honeymoon

This loan starts with a low rate for 1-3 years. Your repayments will be a lower amount for that chosen period. This feature can be very helpful if you have other household expenses to cover. Your loan reverts to the standard variable rate at the end of this honeymoon period.

· Fixed rate home loan

Fixed rates are available up to 15 years, though the term is usually between 1-5 years. In a rising rate market and if you have a tight budget a fixed rate will protect you from higher loan repayments.

· Bridging Finance

This loan is designed to assist you if you buy land or a house before securing a sale for your existing home. The term for bridging finance is 6-12 months.

· Low Doc Home Loan

If you don’t have current tax returns and are self employed, a low documentation (low doc) loan may be an alternative option to a full doc loan. As the risk to the lender is higher, the interest rates and fees can be higher depending on the value of security offered.

· Offset loans

The easiest way to picture an offset loan to imagine your general everyday account is linked to your home loan, with the added benefit of the daily balance offsetting the interest on your loan. It is important this is a 100% offset account (loan and offset are equal) to maximise the reduction of your interest payments and clear your debt sooner.

· Professional Package

If you borrow > $150000 or $250000 a professional package can benefit you through discounts off the standard variable rate, waiving application and monthly fees and sometimes offering a Gold credit card without annual fees, all for one annual fee. Speak with your broker to confirm the package has a cost benefit for you.

· Line of credit

Sometimes referred to as equity lines, this loan allows you the flexibility of paying and redrawing lump sums of money, paying interest only on the monthly balance or allowing your interest to capitalise within your limit. Caution is recommended as no principle repayments are required and is in safe hands if you are a disciplined borrower.