Basic Home Loan
A basic home loan is essentially a loan with limited features, often on a variable rate. Those who sign up for this loan, get a cheaper rate compared to other loan types. However, it all depends on the lender and what features they include in their loan package.
As a general rule, you should only pay for services you will get in the package and there are certain basic home loan features that will enable you to pay off your obligations sooner. In some cases, instead of choosing the cheapest option, it’s better to carry out thorough research and compare features of different packages. This will put you in a better position to choose the right option.
Basic Home Loan Features
Different lenders offer different features, including waived or reduced loan application fees, lower or no ongoing fees, and low-interest. This, however, comes at the price of flexibility. Often you have to forego certain things to be able to get these features.
Who Should Apply for Basic Home Loan?
Like any other home loan product, a basic home loan is not the right option for every borrower; it has its pros and cons. It doesn’t offer special interest rate discounts to those who borrow over $1 million. Due to the simple and straightforward nature of this home loan type, consider the following before making a decision whether to go for it or not:
• Applying for Loan of $250,000 or Lower
The basic home loan is perfect for those who apply for a loan of $250,000 or less. With this loan type, you can get a lower interest rate than a standard variable rate.
• Looking for Low Fee
If you do not want to pay an unnecessary fee for the services you don’t use, you can choose this home loan. As discussed, you can request to waive off or reduce the fee and charges by choosing this loan option. It allows you to pay only for those features that you want or need at a very low cost.
• You Find it Difficult to Change Banks
Some people find it hard to switch banks. They are either satisfied with the services offered by their existing bank or too lazy to move to another bank. If you fall into one of these categories, it is better to keep it simple and go for a basic home loan without getting additional features.
• Looking for Simple Feature
Some prefer having simple arrangements instead of getting caught up in complex financial dealings. If that’s you, then this home loan is the right choice, as it offers simple terms without any financial hassle.
Lenders Offering Basic Home Loan
Fees and interest rates associated with a loan vary from one lender to another. But when it comes to the major banks in Australia, they offer almost the same features. Below are some of the banks that offer a basic home loan product:
• National Australia Bank offers a ‘Base Variable’ home loan
• The Australia and New Zealand Banking Group offers ‘Simplicity Plus’
• Suncorp Australia offers ‘Back to Basic’ home loan
• St George offers ‘Basic Home Loan’
• Westpac offers Flexi First Option
• Commonwealth Bank of Australia is offering a 3-year special rate saver
There are also a number of other banks that offer the same products with different names. Consult our team at Hunter Galloway before making a final decision.
How to Find the Cheapest Loan?
It is not always easy to find the cheapest loan that is in line with your financial goals. There are so many lenders in the market, which can make it even more difficult to figure out which one is suitable for you. But that’s where Hunter Galloway’s team of experts come in. There are a number of other factors to consider when looking for the right loan product. For example, if you do not need a large loan amount, it can be better to focus on the fees instead of interest rates. Make sure you look for the hidden fees as well, especially around the settlement costs or legal fees. In addition to that, try to find a loan product that does not include redraw fees. A number of lenders often waive the application fee if you are a first-time home buyer too. Therefore, keep these factors in mind whenever looking for a home loan. Speak to our team today about a basic home loan and whether it is right for you.