Explore Loan Types for First-Time Buyers

A fixed-rate home loan locks in an interest rate for a set period, typically 1–5 years. During this period, your repayments stay the same, regardless of market changes.

Benefits of a Fixed Rate:

• Predictability:
• Protection from Rate Hikes:Safeguards you from interest rate increases during the fixed period.

Drawbacks of a Fixed Rate:

• Less Flexibility: Limited ability to make extra repayments.
• Break Fees:Can be costly if you need to exit or refinance the loan early.

A variable rate home loan has an interest rate that fluctuates based on market conditions. This means your repayments may change over time.

Benefits of a Variable Rate:

• Flexibility with Extra Repayments: Many lenders allow extra payments to reduce your loan faster.
• Potential to Save: If rates fall, your repayments decrease, potentially saving you money.

Drawbacks of a Variable Rate:

• Uncertain Repayments: Budgeting can be harder due to changing rates.
• Vulnerability to Rate Hikes: Repayments increase when rates rise, which can be challenging for some buyers.

A split-rate home loan divides your loan balance between fixed and variable rates. This hybrid option provides some stability while allowing for flexibility with extra repayments.

Benefits of a Split Rate:

• Balance of Stability and Flexibility: Fixed portion offers security, while the variable side allows extra payments.
• Reduced Impact of Rate Hikes: Only the variable part of the loan is affected by rate changes.

Drawbacks of a Split Rate:

• Complex Structure: Managing two portions can be challenging for first-time buyers.
• Limited Benefits of Fixed or Variable Loans: You don’t get the full benefits of either loan type.

An offset account home loan links a transaction account to your loan, offsetting your interest by the balance in that account. The higher your offset balance, the less interest you pay.

Benefits of an Offset Account:

• Interest Savings: Reduces the overall interest paid, which can shorten your loan term.
• Easy Access to Funds: The offset account acts like a regular transaction account, so you can access the money anytime.

Drawbacks of an Offset Account:

• Higher Fees: Some offset accounts come with extra fees.
• Requires Regular Savings: To benefit from an offset account, it’s ideal to keep a significant balance in the account.

A redraw facility allows you to make extra repayments on your loan and then access those funds if needed. It’s a helpful tool for managing finances flexibly while reducing interest.

Benefits of a Redraw Facility:

• Flexibility with Extra Repayments: Make additional payments to lower your balance and access funds later if needed.
• Interest Savings: Extra repayments reduce the principal amount, saving you interest.

Drawbacks of a Redraw Facility:

Fees for Withdrawals: Some lenders charge fees for redrawing funds.
• Restricted Access: May have limits on the number of withdrawals.