Full Featured Variable Home Loan
	Bank Lender – Widely Available 4 Star CANNEX Home Loan Star Rating Discounts and rebates are for the life of your home loan/mortgage Get Approved Now – Call 1300 55 81 61 To find the 3 Hottest Mortgages in this class call 1300 55 81 61 or click here.

3 Year Fixed Rate Home Loan
	Bank Lender – Widely Available Discounts and rebates are for the life of your home loan/mortgage Able to be capped or locked at application Get Approved Now – Call 1300 55 81 61 The 3 Year fixed rate with this lender is 5.99% plus our rebates starting at 0.15% year 1+ To find the 3 Hottest Mortgages in this class call 1300 55 81 61 or click here.

5 Year Fixed Rate Home Loan
	Bank Lender – Widely Available Discounts and rebates are for the life of your home loan/mortgage Able to be capped or locked at application Get Approved Now – Call 1300 55 81 61 The 5 Year fixed rate with this lender is 6.74% plus our rebates starting at 0.15% year 1+ To find the 5 Hottest Mortgages in this class call 1300 55 81 61 or click here.

To find the 3 hottest Lines of Credit, 10 and 15 Year Fixed rates or any other home loan product, click here.

The rates quoted here are based on the average new loan of $350,000 and a term of 25 years.  Last updated 14-10-11

WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The ‘Total Advantage’ saving was calculated on the basis that the loan would be maintained for the full term of 30 years (unless otherwise advised or discussed), not refinanced with another lender during that period and make no repayments in excess of the minimum monthly payments fixed for the loan during that period.[contact-form]

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Whilst the core loan products are quite stable, the Australian mortgage market doesn’t stand still. New deals, special rates and limited offers come and go almost every day. So much so, interest rate websites can’t cope.

Your Mates Rates mortgage broker has access to up to the minute information on 400+ different mortgage products from our leading panel of mortgage lenders. Using this information, leading edge independent tools and a wealth of professional experience, your mortgage broker ranks these home loan deals to find the right loan and lender for you.

What types of home loans are available?

The information on this page will help you understand the basic loan types, although the features, how much they cost and how they affect you varies lender to lender.

When you are ready to find a home loan with someone you can trust, talk to a professional.

Request a free appointment – No charge, no obligation and with the comfort of a time and place that suits you. You can also call us on 1300 55 81 61.

Principal and Interest Home Loan

Principal is the actual money you have borrowed and interest is the fee lenders charge you whilst you owe this money. A Principal and Interest home loan is simply one which includes an allocation for repayment of the principal together with the interest charge in your regular minimum repayment.

Pros:

• Your loan is repaid with each instalment with reduces interest costs and increases the equity in your property.
• Minimum repayments are higher as they include the interest charge together with an allocation for principal.

Cons:

Interest-Only Home Loan

The name says it all. Repayment of the principal is deferred for an agreed period (usually 1-5 years) and during this time you only pay the interest charges which results in a lower minimum payment as there is no allocation for principal. At the end of the interest only period – usually one to five years – you must start making Principal and Interest Repayments over the remaining term of the loan, although some lenders will also allow you to extend the interest only period.

Pros:

• Payments are lower during the interest only period offering you time to adjust or freeing up money to renovate or improve the property.
• For investment properties, it lowers payment commitments enabling you to maximise payments any non-deductible debt
• Maximises mortgage rebates if you take an Ongoing Rebate Payment
• Payments increase at the end of the Interest Only period
• Overall interest costs wind up more expensive than paying Principal and Interest
• Many lenders assess your ability to repay the loan only on the principal and interest repayments over a shorter repayment term which can reduce your borrowing power

Cons:

Basic Variable Home Loan

Interest charged on all variable rate mortgages moves up or down in accordance with movements in interest rates, which are set by your lender with some guidance from the Reserve Bank of Australia.

Basic variable loans have a lower interest rate and generally have fewer loan features than a standard variable loan. Over the years, basic variables have increased in flexibility with many accepting extra payments and allowing redraw which is the ability to take out any extra money that you have put in,

Features and flexibility vary wildly with basic variable mortgages with some prohibiting extra payments, whilst others include a 100% offset account. Very few have sufficient features that will allow you to minimise interest costs for that loan without quite a bit of hard work with manual transfers often being required for redraw and extra payments,

Pros:

• Minimum repayments fall when lenders lower interest rates
• You can usually pay off the mortgage quickly by not having any penalty for advance payouts
• Usually have a lower interest rates

Cons:

• Repayments rise when lenders increase their mortgage interest rates
• Wide variation in flexibility and cost to deploy features makes comparison quite difficult without the right tools and experience.
• For loan amounts of $250,000 or more, Standard Variable offers greater flexibility and if packaged may also have a lower interest rate
• Rapid rate hikes can catch you off guard and place you under financial pressure
• Flexibility features often carry limitations and fees which really add up (like ATM or EFTPoS fees on redraws)

Standard Variable Home Loan

Like a basic variable loan, interest moves up or down in accordance with movements in interest rates, set by your lender.

Standard variable loans may appear to have a higher interest rate however for loan amounts above $250,000, generous discounts are available for packaged banking. Discounts increase as total borrowings increase.

Standard variable loans are the rolls royce of mortgages and generally have an extensive range of loan features ranging from offset accounts through to portability, fee free redraw and beyond.

Pros:

• Repayments fall when lenders lower interest rates
• Can usually be split with fixed rate mortgages to help protect against rate hikes.
• Standard variable loans offer flexibility and many additional features
• Packaged banking can deliver a far more flexible mortgage at a lower effective cost than variable through interest rate discounts which increase as loan amounts increase
• Taking a banking package also includes other benefits such as fee free banking and discounts on other finance products such as financial planning, insurance and more.
• Incurs a higher interest rate for lower loan amounts and non-packaged loans
• Repayments rise when official interest rates rise
• Wide variation in flexibility and cost to deploy features makes comparison quite difficult without the right tools and experience.

Cons:

Fixed Rate Home Loan

The interest rate on a fixed rate loan does not change during the fixed rate period which also means your minimum  payment does not change either.

The ‘fixed rate period’ can vary, but you can usually “lock in” your repayments for between 1-5 years, with some lenders having 7, 10 and 15 year terms.

At the end of the ‘fixed rate’ period’, you can decide whether to re-fix you rate or allow it to roll over to a variable rate. Although the fixed rate period may only be a few years, the full loan term is longer and often set at 25 or 30 years.

Pros:

• You can be confident of repayment commitments during the fixed rate period.
• Provides peace of mind if you are concerned about rate rises
• Allows more precise budgeting
• Interest rates are usually higher than a Standard or Basic variable loan
• Most lenders only allow only limited additional payments
• Redraw is rarely available
• Often carries an unknown penalty for early payout of the loan
• Some lenders change to Basic Variable rate at the end of the fixed rate period, whilst others revert Standard Variable making comparison quite difficult without the right tools and experience.

Cons:

Split Rate Home Loan

A Split Rate home loan allows your total borrowings to be split part fixed, part variable There are usually quite small minimum loan amounts so you can decide how much to allocate to each based on your personal appetite for risk and interest savings.

Your Split Rate home loan combines the Pro’s and the Con’s of each loan type that you combine in the splits.

Capped Rate Home Loan

A Capped Rate Home Loan is a hybrid home loan with a variable interest rate up to an agreed interest rate. If the lender increases variable rates above the cap, your interest rate remains fixed until either rates fall below that rate or your capped rate period expires.

Pros:

• Minimum repayments fall when lenders lower interest rates
• Variable rates will often remain lower than fixed rates.

Cons:

• Limited choice of lenders.
• The variable rate charged is often higher than a basic variable rate loan.
• Variable component traditionally operates as a basic variable loan for most lenders.
• The capped rate is usually higher than the fixed rate for the equivalent fixed rate term.
• Has many of the fixed rate handicaps including rate cap fees and limitation to extra payments without penalty.

Introductory Rate Home Loan

The interest rate is usually low to attract borrowers. Also known as a honeymoon rate, this rate generally lasts only for or short term before it jumps up to a much higher variable rate (often Standard Variable). Rate types vary between lenders as discounted variable, fixed or capped.

Pros:

• Usually the lowest available rates
• When payments are made at the introductory rate, the principal can be reduced quickly
• Some lenders also include an offset account
• Payments usually increase sharply after the introductory period
• Most operate as basic variable loans only you wind up paying Standard Variable Rates
• Can compromise your access to packaged banking discounts
• Many come with early payout penalties.
• Wide variation in introductory terms, reversion rates, introductory rates and establishment makes comparison quite difficult without the right tools and experience
• Introductory rates may start out cheap, but quickly become expensive in most cases

Cons:

Lines of credit

A Line of Credit is like a personal overdraft or very large credit card. Lines of credits are commonly used to raise funds for investment or personal use by providing cash up to set limit which remains in place for the full term of the loan.

Payments are made on an Interest Only basis for the full life of the loan where the Line of Credit is an evergreen facility.

Pros:

• Extremely flexible allowing you maximum access to equity
• Offers  similar flexibility to credit cards and over drafts at much lower, home loan interest
• Simplifies and centralises all repayments and maximises interest offset opportunities

Cons:

• May attract a small interest rate loading (usually around 0.05%)
• You need to be disciplined to make sure you are actually paying your loan off or managing it to your own financial goals
• Can be very dangerous for inexperienced borrowers or borrowers without clear financial plans who regularly monitor their financial position

Non-conforming Home Loan

These loans are offered through non-bank lenders to people with poor credit ratings which may make it hard for them to obtain a home loan from a traditional lender.

Although non-conforming lenders may be willing to overlook prior credit problems, they usually require stronger evidence of your ability to repay the loan.

Pros:

• Lenders forgive poor credit history and rating
• Higher interest rate than banks and more traditional lenders
• Loans mostly operate like a limited basic variable loan
• Low deposits options are more expensive again
• Entry and exit costs are high

Cons:

Remember, this is only a brief overview of some options available in the Australian mortgage market place. Features of each loan, including the amount borrowers will lend you, per use fees and important functionality varies between  lenders.

Limited deals, special rates and limited offers come and go almost every day so when you are ready to find a home loan with someone you can trust, talk to a professional.

Request a free appointment – No charge, no obligation and with the comfort of a time and place that suits you. You can also call us on 1300 55 81 61.