Types of Home Loans: Basic Home Loans
A basic home loan usually has a low interest rate, and no ongoing fees, but lacks the features of its more expensive counterparts. A basic home loan is a great option for many borrowers, as it will often be the cheapest option. Some examples of people that may not want a basic home loan are:
- Someone constructing their house: A basic home loan may not allow for construction, or may charge fees at each stage during the construction.
- A regular investor: Someone that has multiple investments, or plans to buy and sell often, is probably better suited to a Professional Package (See Below).
- Someone with a lot of surplus cash: An offset account, would be worth considering – something that is not available on many basic home loan products.
- If you're looking to split your loan.
Basic Home Loan FAQ:
Do basic home loans have fees?
This can vary, but generally basic home loans have a low application fee and $0 ongoing.
What is the advantage to a basic home loan?
They won't usually have any ongoing fees, and can sometimes have the same (or even lower) interest than the other options. In short, it can be the cheapest option.
Is a basic home loan fixed or variable?
It can be either - however a basic loan usually refers to a basic variable loan.
Do I get redraw or an offset with a basic home loan?
Assuming it's a variable loan, most banks will allow redraw (with a fee in some cases), but not an offset.
Can I change to a different product later?
Yes, you may choose to change to a Packaged loan later.
Can I split a basic home loan?
Not usually.