Home loans Australia

The advent of diversification has made a significant change in the shape of the Australian home loan market.

Now, there are 5 types of home loan products available in the Australian loan market. They are honeymoon rate loan plans, fixed rate home loans, Variable rate home loans, split loans and interest only loans.
The honeymoon rate home loans charge the borrower to pay a lower rate of interest for the first couple of years before the repayments revert back to the original interest rate. So, the loan plan gives the borrower more time to get on his/her feet and repay easily.

In case of variable rate, the payable rate of interest fluctuates according the official cash rate

set down by the Reserve Bank of Australia. If the market interest rate goes up, the borrower has to pay more. However, the borrower is at the profitable end, when the market rate falls down.Fixed rate home loans generally allow a borrower to lock in an interest rate for a particular period of time, normally 1-5 years. So, the borrower is assured regarding the monthly outgoing.

The split

home loan plan is a pre-determined portion at a fixed interest rate and the rest at a variable rate of interest. If the borrower wants the assurance of a fixed rate but want to take advantage of rate drops, then split rate is the tailor-made option.

Interest only loans available in the loan market are those loans without any principle repayments are required. The borrower has to pay the interest portion only.The borrowers are advised to go through various aspects of each loan minutely and go for that loan which matches their need ideally.