Mortgage Loans

Choosing the right mortgage loan is one of the most important financial decisions a home owner is likely to undertake – but choosing the best home loan for your circumstances doesn't have to be a burden.

Generally speaking, home buyers have the choice of three broad home loan structures – variable, fixed and split mortgage loans. 

Variable Mortgage Loan:

Variable mortgage loans are the most popular type of home loan in Australia. The amount of interest paid against a variable loan is dictated by the lender, and also fluctuates as a consequence of national and international economic and bureaucratic factors – for example variable interest rates tend to move in tandem with changes to the official cash rate, as determined by the Reserve Bank of Australia.

Variable mortgage loans are flexible meaning you can usually make additional mortgage repayments whenever you want. While home owners have no control over the loan interest rate, the reality is that variable loans are often cheaper than fixed rate mortgage loans over the long term.

Fixed Mortgage Loan:

If the thought of rising interest rates sends chills up your spine, then the option to fix your mortgage loan might prove a more palatable alternative.

Fixed mortgage loans commonly extend between one to five years in length and the rate never changes. As a consequence, fixed loans provide financial security if rates go up, but on the flipside, can become a burden should rates fall.

Split Mortgage Loan:

Split mortgage loans let home owners fix some of the interest repayments, while the balance is charged a variable interest rate. In other words, if rates soar, the fixed component of the loan will be protected against the increase. Alternatively, if rates head south, the variable component of the loan will allow the home owner to enjoy lower loan repayments.

There are literally hundreds of home loan options in the marketplace and it is important to do the research before deciding on a loan that is suitable to your circumstances. For some of the best mortgage rates available on the market compare home loans online. Or for more information on home loans, consult our Home Loans Guide.