Variable-rate loans depend on the changing cash rates of the Reserve Bank of Australia and the resulting fluctuation in the rate of interest. Repayment amounts vary, with some months having lower payments and others having higher payments. Borrowers opt for variable rate loans as it gives the ability to repay the loan faster through the following.

• Extra repayments: You are allowed to repay more than your regular monthly repayments.
• Redraw facility: Once you have made additional payments to your loan, you can then borrow some of the money you have already paid.
• Offset accounts: You can have a backup payment option where you place a portion of your paycheck into an offset account to subtract from your home loan principal amount.

Your home loan rate of interest will be locked for 1-5 years. These are a great option if you are on a budget or do not want to deal with inclement in the rate of interest. You will have to repay a fixed amount every month without worrying about the rate of interest. However, fixed-rate loans may not offer the first-time home buyer benefits of a variable loan and it will be difficult to switch to another loan without paying the break cost fee.

With this type of loan, you divide your total loan amount into two separate loans: one with a variable interest rate and the other with a fixed interest rate. This allows you to enjoy the flexibility and potential savings of a variable loan, while also providing the stability and predictability of a fixed-rate loan.

This is slightly different from the traditional first home guarantee schemes. You can choose the interest-only loan route and pay the interest only. This arrangement is usually only for 7 years, after which you need to start repaying the principal amount along with the interest.

It is a perfect choice for property investors hoping to make a profit by reselling the property. It is also suitable if you are a young low-income home buyer keen on owning a home now while you generate more income later.

A guarantor loan means having your parents or other family members be your guarantor and using a portion of their home as a security for your mortgage. This is a good option if you want to borrow 80% of the purchase price but do not want to pay the lender’s mortgage insurance. If you fail to repay your loan, the bank will go after your guarantor’s home and seize the property to recover its loss.

Low documentation loans are perfect for freelancers, self-employed people, and business owners who do not have the standard papers to apply for the loan. Low-doc loans carry a higher rate of interest and fees in comparison to other loans.

You can get a line of credit loan on top of your current mortgage to make renovations to your home. This loan enables you to take advantage of your mortgage to pay for other things. The loan amount depends on the equity you have on your property and you will be able to use it either bit by bit or lump sum. After drawing from the line of credit, you will have to make extra repayments to compensate.