The most common loan

This is a common offer by banks and has been used by many people to buy their first homes. These home loans have repayment periods of up to 30 years and are regularly used by home buyers today.

Don't be caught by start-up lures!

Often lending institutions will offer a discounted start-up period with lower interest rates to motivate you to choose the loan.

The benefits of this discount (or honeymoon period) are short-lived as the remaining years on your loan are charged at a standard variable rate.

Advantages

• Discipline - regular monthly, fortnightly or weekly repayments help you with budgeting.
• Redraw - most institutions will allow you (subject to terms and conditions) to withdraw additional repayments you have made over and above the minimum repayment.
• Offset - it may have the ability to offset credit balances held in other accounts at the same institution against the principal of the loan.
• Extra repayments - these are usually allowed at any time. 

Disadvantages

• The interest rate is variable (apart from any start-up period) and the loan will be subject to interest rate fluctuations.
• The interest rate is always higher than Low Frills Home Loan rates