Advice • Tips • Inspiration

Choosing a home loan can be a daunting process as there are many things to consider for not only yourself, but your family.

Choosing the loan that’s best for you can also be difficult and confusing due to the lending industry becoming increasingly competitive and complex in recent years.

When choosing a home loan it’s important to work out the features you need from your loan as there are many different variations when it comes to home loans. The fees and features differ greatly depending on the lender you choose, and this is a vital consideration.

When making the decision of what home loan you will choose, it’s also important to look at the loan as a whole package, not just one aspect of the loan. For example, if a loan has a very low interest rate the fees may work out to be high.


Compare home loans

Do your research. Shop around. Compare different home loans and different lenders.

Asking lenders for a key fact sheet is a valuable tool when comparing home loans. This will give you the most important information.

Types of loans

The most common home loan is a principal and interest loan which involves making regular payments against the amount borrowed, as well as paying off the interest on the loan.

The lender will usually offer different principal and interest loans, with different features included.

Other types of loans include an interest only loan, bridging loan or building/ construction loan.

Rate options

Rate options for your loan can include variable, fixed or split loan.

Variable interest rate – This can go up or down over the life of your loan.

Fixed term interest rate – This rate will remain fixed for a period of time. After this time it will usually revert back to a variable interest rate.

Split loan – This is split into variable and fixed term.

Other features

Other features of your home loan can include having an offset account, redraw facility or a line of credit.

Having an offset account attached to your home loan can be beneficial if you have a substantial amount of money in the account. This amount is taken off the amount you owe on your loan, reducing the interest you will pay over the life of the loan.

A redraw facility enables you to pay extra money off your loan and redraw it later, if needed.

Having a line of credit attached to your home loan means that a specific credit limit is set and you can spend up to that limit. This feature suits people who are disciplined budgeters and who may receive an irregular income.

Having an offset account, redraw facility or a line of credit attached to your home loan can result in a higher interest rate or fees. Therefore it’s important to consider whether these features are a necessity.


For more information on choosing the home loan that’s best for you, contact your local mortgage broker or bank representative.

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