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When it comes to terms, features, repayments, and security, home loans can be very different. Similarly, where potential borrowers are in their lives and their personal situations differ substantially.

It might be difficult to find the proper home loan for your lifestyle, so we’ve put up a guide to help you figure out which one is right for you!

While everyone’s home loan needs and requirements will be different, most borrowers will fall into one of the four categories below:

1. Single-income buyers

Single-income buyers are often single young professionals who have a hectic schedule that includes work and social activities. They prefer to live near the CBD so that they can walk to cafes, restaurants, pubs, and their workplace. For this category, proximity to entertainment and athletic amenities is also a huge plus.

In light of this, individual buyers frequently seek out properties with a community atmosphere, such as an inner-city apartment or townhouse that doesn’t require much care. They won’t normally look for a one-bedroom apartment because it would limit them from having a pet and from having an extra bedroom or study that they could rent out.

2. Young couples

Young couples are usually looking for a home that they can picture themselves staying in for 10 years or more, and they may be willing to put some maintenance on it. To accommodate any plans to start a family, the house will most typically include at least three bedrooms and will be accessible to schools, stores, parks, and public transportation.

3. Families

Families will most likely have children who are now young adults and will be seeking for a four-bedroom, two-bathroom home to accommodate them all. Teenagers frequently desire their own space away from their parents. Large living areas and a garden will be required, as well as a garage or additional vehicle space. Families will still want to be close to schools, stores, parks, public transportation, and possibly a neighbouring university.

4. Downsizers

Couples who have seen their children leave the nest and no longer require a four-bedroom home are known as downsizers. They’ll seek for a property with two bedrooms so they can have an extra room for guests. They might choose to live in a community of like-minded people their own age. A home that is simple to maintain while still allowing for hobbies such as gardening is essential.

Types of home loans

Various home loan kinds may appeal to different types of buyers. The following are examples of these types of loans:

1. Fixed rate home loans

Borrowers benefit from fixed loans since their repayments and interest rate are fixed for a set period of time, usually one to five years. This assurance is especially important for persons who are acquiring their first loan, as the transition from rental payments to home loan repayments can be difficult. The security of fixed loans appeals to many young couples.

2. Variable rate home loans

Variable loans mean that your interest rate may change throughout the course of the loan, generally in response to changes in the Reserve Bank’s cash rate. Variable loans often allow you to pay more than the minimum required payment, make extra repayments, or make weekly, fortnightly, or monthly instalments. Variable loans appeal to a wide range of customers because of their flexibility.

3. Split home loans

A split home loan allows you to divide your house loan balance into two halves, one with a variable rate and the other with a fixed rate. You can divide the funds in whatever way you like, such as 50/50, 60/40, and so on. If you split your home loan, you’ll be able to benefit from both sorts of rates. If you have a larger percentage of your loan on a variable rate, you may be able to benefit from lower interest rates, while fixing a larger portion of your loan may be more favourable if interest rates rise. Split loans give you the best of both worlds, and they’re popular among lone purchasers whose circumstances are unpredictable, as well as families who require flexibility.

4. Home loans with an offset account

An offset account is a transaction account linked to your home loan that works just like any other transaction account, allowing you to withdraw and deposit funds. When interest is calculated, the money in an offset account is ‘offset’ against your home loan debt, lowering the amount of interest charged on your home loan. Most buyer groups like offsets since they can significantly reduce the amount owed over the life of the loan.

5. Home loans with a redraw facility

A redraw facility is a facility where you can withdraw money from your loan account if you have made extra repayments to your home loan. The benefit of having a redraw facility is that the additional repayments can reduce the interest you pay but can withdraw them easily when you need them. Note: You cannot use a redraw facility to access funds that are made up of your regular monthly repayments.

Use our loan comparison calculator to figure out your payments and see what benefits or features are right for you!


Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.