The main home loan features you should consider

When you begin your search for a home loan there is a lot to take into consideration. It's not simply about finding the cheapest home loan rate, although this will play into your final decision. We've put together a list of the most important home loan factors to help you choose the right home loan for you.

Here is a list of the main things you should factor in when choosing your home loan:

Fixed vs. Variable rate

One of the first decisions to make on your home loan is whether your interest rate will be variable or fixed for a certain term.

A variable interest rate will move along with the market and is sensitive to Reserve Bank decisions about the national cash rate.

Fixing your rate will mean that it cannot change even if variable rates in the markets begin to increase, but the flip side is that you can get stuck with a higher rate while others decrease.

Term of your loan

A shorter term for your loan will require higher repayments, but save you more interest in the long term. Most borrowers elect to have terms higher than 15 or 20 years, to give them some room to breathe throughout the repayment years.

Early repayments

Throughout the life of your loan, you may be fortunate enough to receive an excess of savings, whether from salary boosts or less spending. Most people use this opportunity to repay big lumps off their mortgage, but forget that they will need to enable this home loan feature to retire their loan before its time.

Repayment frequency

Depending on your lifestyle and income, you can choose to repay your home loan in weekly, fortnightly, or monthly instalments. Choosing more frequent repayments will actually save you a few dollars each time, but it is far better to have a schedule that suits your needs, rather than risk missing a payment.

Line of credit

This type of home loan allows you to use the equity of your home for other purposes. You can think of it as being able to borrow from your home loan to spend or invest. However, you will need to avoid the temptation of using the feature too often, lest you extend your home loan even further.

Choosing a home loan is a personal and financial choice but as long as you have a home loan checklist and can take these factors into consideration you should be able to find the right home loan for you. Start your search right now with the RateCity Australian home loan comparison tool and the home loan repayment calculator.


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