Standard Variable Rate Loans:

Standard variable is the most popular loan category in Australia and accounts for a large percentage of mortgage business. Getting a standard variable home loan is an easy process for a borrower who meets mainstream criteria and has good credit.
Standard variable home loans often include redraw facilities, portability features and allow the borrower to make additional repayments. Borrowers have the option of making repayments weekly, fortnightly or monthly, and can combine their loan with other loans known as splits. This allows a mixture of variable and fixed rate loans or many variable rate loans identified by the purpose of the loan. Complex and flexible features tend to have a slight premium on their standard variable rate compared to basic loans.

Fixed Rate Loans:

Fixed Rate Mortgages, as the name implies, is a loan locked in for a specified period of say, one, three or even five years. They are ideal for borrowers looking for consistency and certainty, and are concerned that interest rates may rise above what they can fix at the moment. Fixed rate loans tend to offer less flexibility than variable rate loans thus they tend to be used in conjunction with variable rate loans.

Offset Accounts:

An offset account links a fully transactional account to your mortgage. These accounts allow you to offset your savings, salary and other cash resources against your home loan. You pay less interest on your loan as you’re only charged interest on the balance.
For example, if you have a $350,000 mortgage and $10,000 cash in the offset account, you will only have to pay interest on $340,000 each month. However, since your monthly repayments are calculated on the original amount, you are effectively paying extra on your mortgage each month. The additional repayments enable you to clear your debts faster.

Reverse Mortgages:

Reverse Mortgage products were introduced to Australia over 10 years ago and have become increasingly popular amongst asset-rich, cash-poor seniors who want to remain in their home and still have money to live and enjoy life. Reverse mortgages allow people over 60 to borrow against the equity in their home with the knowledge that they will not be able to make the repayments. In lieu of repayments, the lender capitalises the repayments onto the principal so that when the property does in fact get sold, the value should have increased to the level of the added principal amount. These loans have ‘no negative equity’ assurances so seniors and their heirs can feel comfortable that they won’t be left with a huge accumulated debt.

Lines of credit:

Line of Credit loans are also known as ‘evergreen loans’ because they don’t have a set term. Line of credit loans offer the most flexible option in the market as you have virtually unlimited access to your funds. A line of credit is similar to a big credit card where transactions can be applied to it very easily thus they are a sensible choice if extremely disciplined in managing finances.