These are some common types of loans used when purchasing property.

Standard Variable Loan

This loan is the most common amongst borrowers. The interest rate is variable and can move up or down, thereby adjusting your repayments. This loan offers more flexibility than other loans as you can usually make unlimited repayments and redraws without penalty.

Basic Variable Loan

A basic loan is also a variable loan but usually offers less features than standard variable loans. Generally there is a minimum amount that can be redrawn and there is usually a fee involved. These loans generally don’t include an offset account.

Fixed Loan

A fixed loan allows you to fix the interest rate for a period of time, generally between one and five years, with some lenders seven, ten and even fifteen years. After the fixed term, the loan usually reverts to the standard variable rate on offer at that time or you may choose to refix the loan for another term. With fixed loans the interest rate is fixed on the day of settlement unless the rate is locked at application which incurs a fee.

Line of Credit

These loans are extremely flexible and are similar to a credit card with a large limit. You can repay as much as you want and redraw as much as you want.

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