Types of Home Loans

The leading banks usually offer the types of home loans listed below. These types of home loans are also used in the case when you have an existing home loan and need additional funds. Read more about Further Loans.

Your Bond Choice consultant will help you choose the option that best suits your needs and help you through the application process.

Variable Rate Home Loan

With a variable rate home loan, your interest rate is linked to the base home loan rate which moves up and down depending on market conditions. If the base rate decreases by one percent, so will your interest rate, and of course if the base rate increases so does your home loan rate.

Fixed Rate Home Loan

Here your interest rate is fixed for a specified period, normally between one and two years. Generally the fixed interest rate will be slightly higher than the base home loan rate when the loan is taken out. A fixed rate loan protects you from rising interest rates and gives you the certainty of knowing exactly what your payments will be. However it does not allow you to benefit from any decreases in the interest rate over the fixed period.

Capped Rate Home Loan

This type of home loan allows you to benefit from any decrease in interest rates, but has a maximum rate built in so you never pay more than the capped rate. These loans are not always available from banks, and generally the qualifying criteria are more stringent.

Reducing or Step Down Home Loan

With this type of home loan, your interest rate is guaranteed to decrease by a set percentage in steps, such as 0.25% every six months for the agreed period, which is usually less than 5 years. This gradual reduction in interest rate applies regardless of whether the home loan interest rate rises or falls.