Home loan interest rates

Interest rate and the affordability of the loan plan go hands in hands. The need of different borrowers may be different,

but all search for a competitive rate of interest. With the diversification of the Australian loan market, different purpose and borrower specific loan plans have emerged now. The borrower can have a cheap loan deal with competitive rate of interest, if he garners the basic knowledge regarding them.

The home loan plans with an introductory, or honeymoon, rate simply means that borrower needs to pay a lower rate of interest for the first couple of year. The first time buyers should go for this home loan.

If you want to take the advantage of the fluctuations of the financial market, the variable rate home

loans are the ideal ones. The variable rate home loans, as the name suggests, fluctuates in their rate of interest according the official cash rate set down by the Reserve Bank of Australia.

Fixed rate home loans generally allow a borrower to lock in an interest rate for a particular period of time. The lock in period is generally 1-5 years. Here, the borrowers are assured that their repayments will be set for the fixed period.

The advantages of both fixed and variable rate are traded of when the borrower goes for the split rate.

Split home loan is a pre-determined portion at a fixed interest rate and the rest charges the borrower a variable rate of interest.

Interest only loans available in the Australian loan market are the tailor made solution for investors as they are the loan plans without principle repayments clause. The borrower needs to pay the interest portion only.

The borrowers are advised to go for that loan plan which suits his/her need ideally.