Home Loan comparison

Whilst the housing sector was in decline at the end of 2011, further rate cuts this year may prove extremely helpful.
Many economists and commentators believe that by dropping the interest rates further, the Reserve Bank of Australia (RBA) will be giving the housing sector the jump start it needs.

Shadow treasurer Joe Hockey said this week that the RBA should do most of the heavy lifting in order to boost the local economy during this time of global economic uncertainty. “I think the Reserve Bank has the capacity to do much of the initial heavy lifting and to stimulate economic growth by reducing interest rates,” Mr Hockey said.

For Australians looking to buy a property in the coming months, it is of paramount importance that they understand the various home loan options and features available to them.

Standard Variable Rate Home Loans
This type of home loan allows you some flexibility in your repayments as the loan rate is connected to the interest rate set by the RBA. If interest rates are cut you pay less on your home loan. However your repayments will also rise when the official interest rate rises.

Fixed Rate Home Loans
Fixed interest rates give you fixed loan repayments. This loan gives you the security of a constant interest rate giving you the ability to budget your future spending. However, this type of loan is very rigid, allowing only limited additional payments and applying some penalties for early payouts of the loan.

Split Rate Home Loans
This type of home loan gives you the best of both worlds where one portion of the loan is fixed and the other is variable. This loan gives you the freedom to take advantage of the various features that the different home loans have to offer. This home loan is also very rigid and allows limited additional payments.
There are a number of features that if added to your home loan may prove to be of great value to you.

An offset facility can help you pay off your loan faster. An offset account functions like a regular savings account, where the balance of the account is offset against that owing on your mortgage. This option can help you pay off your loan sooner as well as to build up equity in your home.

A redraw facility feature in your home loan allows you to make additional repayments into your loan account and if need be access these funds in the future. This is one of the most widely used loan features on the market and one that is offered with most home loan products.

It is important to consider all your options when choosing your home loan as making the

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