What types of home loans are there in Australia

In Australia, there are various kinds of home loans one can avail. Find the ideal one that is suitable for your needs. Here are the most popular ones:

Introductory Loans
Introductory loans offer low interest rates to borrowers. They are likewise known as the ‘honeymoon’ rate. It can last for 12 months and then it can later on rise up. Rates are either capped or fixed.
Advantages

• Offers lowest possible rates
  • Payments made will reduce the principal loan fast
  • There is an offset account set against these kinds of loans

Disadvantage(s)

• The payments later increase when the introductory time has lapsed 

Construction Loans

Construction loans are made specifically to help you with your ongoing dues and payments while you complete your home construction. The main distinction of a home loan from a construction loan is that it enables you to draw from the loan balance, whereas the home loan is given as a lump sum to borrowers.

Interest Only Home Loans
In Australia, you have the option to take out a loan where you pay only the interest of the loan, or pay both the principal loan and the interest. The repayments are much lower if you choose to opt for the interest only home loans. You can use the money on some other things as for construction, renovation, etc. The lender will look into your ability to pay in order for you to qualify and it will last for a maximum of 5 years only. To access interest only loans in Australia you’re best speaking with a finance specialist who can let you know all of the options available. 

Fixed vs Variable Home Loans
Fixed rate loans are the loans that are locked in to the present interest rate at the time of the approval. Hence, the interest rate is not subject to changes. You may need a fix rate for 5 years, but the loan can last anywhere from 20-25 years.

Line of Credit Loans

The moment you have a property and you have established equity by creating repayments, you can later on apply for a loan known as – line of credit. This enables you to access funds when you needed them.

This is practical and handy whenever you need to manage your funds and the cash can be utilized for just about anything and you can pay them on your own set terms.
So long as you have more cash in than cash going out, the account can be very handy. But, they can be costly later on if the line of credit is not reduced as it can yield a much higher interest rate which in turn can drastically reduce your home equity.

Bridging Loans

For those who are trying to buy a new home while they are looking to sell their existing home, you may want to check on bridging loans. This is a short term loan that enables you some 6 months to sell the existing home. Bridging loan as the term denotes will help you navigate and get by this time as you try to find and transition to your brand new forever home.