What are residential home loans?

RateCity StaffJun 29, 2010( 1 min read )

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With social distancing restrictions affecting many Australian workplaces, a lot of us have had to rethink our personal finances, including our home loans. And with big banks and smaller lenders slashing interest rates to new record lows, it’s no surprise that many Australians are refinancing their mortgages, as shown by recent ABS data.

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What is a cooling off period, and how do they work?

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Home Loans

Top refinancing home loans in July 2020

Being in lockdown has given homeowners and property investors plenty of time to think about their home loans. Many banks and other mortgage lenders have been offering a range of financial relief options for customers affected by COVID-19. If you’ve been on a mortgage payment holiday, you may be wondering if you really want to go back to making the same repayments, or if you could get a better deal elsewhere.

Jun 30, 2020( 2 min read )

Residential home loans are home loans that exist for residential purposes as opposed to commercial gain and are available to those who are buying their own home, purchasing a block of land or building a home to live in.

There are two main types of residential home loans available to choose from, depending on your needs:

Variable residential home loans: This type of loan offers a variable interest rate which generally changes as the Reserve Bank of Australia’s (RBA) cash rate moves.
Fixed residential home loans: With this type of loan the interest rate is fixed for a certain term, usually up to 10 years.

Residential home loans can also feature a combination of part of the loan fixed and part a variable rate.

To find a home loan that suits your individual needs visit the RateCity home loan comparison page.

RateCity Staff

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FAQs

Tip: You can use RateCity how much can I borrow calculator to get a quick answer.

How much money you can borrow for a home loan will depend on a number of factors including your employment status, your income (and your partner’s income if you are taking out a joint loan), the size of your deposit, your living expenses and any other debt you might hold, including credit cards.

A good place to start is to work out how much you can afford to make in monthly repayments, factoring in a buffer of at least 2 – 3 per cent to allow for interest rate rises along the way. You’ll also need to factor in additional costs that come with purchasing a property such as stamp duty, legal fees, building inspections, strata or council fees.

If you are planning on renting the property, you can factor in the expected rental income to help offset the mortgage, but again it’s prudent to add a significant buffer to allow for rental management fees, maintenance costs and short periods of no rental income when tenants move out. It’s also wise to factor in changes in personal circumstances – the typical home loan lasts for around 30 years and a lot can happen between now and then.

What are residential home loans?

Related articles

Five home loans to let you borrow more in July 2020

Five home loans for getting cash out from your equity

What is a cooling off period, and how do they work?

Top refinancing home loans in July 2020

Today's top home loans products

Discount Offer Variable Home Loan OO P&I ($200k+)

Home Package Plus Personal Fixed Special (Principal and Interest) 2 Years (LVR 80%-90%)

Live-in Variable Loan (Principal and Interest)

Star Essentials Home Loan (Amounts $150k-$850k, LVR < 80%)

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