Home Loan Types – Explained

Choosing the right home loan can feel overwhelming, especially with so many options available. To help you get started, here’s a simple guide to the most common types of home loans.

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Basic
Variable Loan

A no-frills loan with a lower interest rate and fewer features.

Best for:

Budget-conscious borrowers who don’t need extras.

Standard Variable Loan

The most popular home loan option. It offers flexibility and features like:

Making extra repayments
Splitting your loan
Accessing extra funds through a redraw

Best for:

People who want flexibility and plan to pay off their loan faster.

Fixed
Rate Loan

This loan lets you “lock in” your interest rate for 1 to 5 years. Your repayments stay the same during this time, giving you peace of mind if rates go up. Be aware, there can be extra costs for locking the interest rate before settlement.

Best for:

Those who want certainty and stable monthly repayments.

Combination (split) Loan

Part fixed, part variable – this loan gives you the best of both worlds. One portion of your loan has a fixed rate, the other moves with the market.

Best for:

Borrowers who want some protection from rising rates, while still enjoying flexibility.

Low Doc
Loan

Designed for self-employed people or small business owners who may not have all the usual paperwork like tax returns.

Best for:

People with a solid income but non-traditional documentation.

100% Offset Loan

Links your home loan to an everyday bank account. The more money you keep in that account, the less interest you pay on your loan.

Best for:

Borrowers who keep savings and want to reduce interest without locking money away.

Non-Conforming Loan

For people who don’t meet the usual lending criteria, such as:

Starting a new job
Casual or contract work
Low savings or deposit
No credit history
Life changes like divorce

Best for:

Borrowers with non-standard situations.

Credit-Impaired Loan

For those with a history of missed payments, defaults, or bankruptcy. Some lenders may still be able to help.

Best for:

Check your credit file at www.equifax.com.au to see where you stand.

Bridging Loan

Helps you buy a new home before selling your current one. It’s a short-term loan where you usually pay interest only, with the full amount due after you sell.

Best for:

Homeowners in between properties.

Construction Loan

Designed for building or major renovations. You receive funds in stages as work is completed.

Best for:

People building their home or completing major renovations.

Note: This is general information only and doesn’t consider your personal circumstances. Always speak to a mortgage expert before choosing a loan.

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