The Basic Home Loan from Bank of Melbourne can be taken out as either a principle and interest (P&I) loan, or as an interest-only loan. Interest-only loans may appeal you’re buying or building investment property. The loan can also be used to purchase land for construction.
Both versions of the loan come packaged with a Bank of Melbourne transaction account.
Basic Loan – P&I:
This version of the Basic Loan does not charge you any monthly fees if you make your repayments from your linked Complete Freedom account. There is also no loan establishment fee.
You have the option to make your repayments weekly, fortnightly or monthly, and your loan term can run for up to 30 years. You have the additional benefit of being able to make extra repayments at no extra cost. This can save you thousands in interest over time. It can also shorten the length of your loan. You can redraw your additional funds, but you will pay fees to do so.
The Basic Loan also allows you to take a repayment pause for major life events like maternity leave. Note that you will incur fees for using this facility.
The Basic Loan from Bank of Melbourne also offers you a family guarantee option, whereby a family member can guarantor a portion of your loan deposit in order to circumvent the need for you to pay mortgage insurance. You will need a 20 per cent deposit or more in total – that is, including your family member’s contribution – (or the equivalent in equity) in order to make this work.
Basic Loan – Interest Only
The interest-only version of Bank of Melbourne’s Basic Loan can only be taken out for a maximum of five years if you are an owner-occupier and for up to 15 years if you’re an investor.
The discounted interest rate still applies to the interest-only loan. You still have the option to make additional repayments at no cost – and to redraw these monies if you require although there may be some fees attached to the redraw facility. Repayments on the interest-only loan can only be made monthly.
Who is the Bank of Melbourne Basic Loan good for?
Bank of Melbourne’s Basic Loan could be good if you are looking for a simple standard variable rate loan, with a competitively low interest rate and the option to make extra repayments when and if you can.
Review - What RateCity says
There’s no doubt that Bank of Melbourne’s Basic Loan offers a low interest rate, which is one of the stand-out benefits.
If you’re looking to build, renovate or purchase an existing investment property the Basic Loan may also work. There is no additional interest rate loading for investors and the interest-only version of the loan could help you manage a construction project or investment property from a budgeting perspective.
If you are not located in close proximity to the branch network in Victoria though, you may want to consider whether or not this could be a problem for you.
Bank of Melbourne Basic Loan Options
The Bank of Melbourne Basic Loan is a simple, variable loan option with a competitively low rate.
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