Home loan types explained
Helping you to choose the right type of mortgage.
When you’re choosing a mortgage, apart from the mortgage interest rate, you’ll also need to think about the type of loan you want. Each type is designed to suit different situations and goals.
Offsetting loans
With an offsetting home loan the total amount in your cheque and savings accounts can be subtracted off of your home loan before the interest is calculated.
Table loans
Most people choose this type of home loan. Your regular repayments are the same each week, fortnight or month, unless your interest rate changes.
Interest-only loans
With this type of loan you don't repay any of the money you've borrowed (principal) until an agreed time – then you repay it all in one sum or you could request to switch to a table loan. In the meantime you make regular interest payments every week, fortnight or month.
Reducing balance (non-table) loans
With a reducing balance (non-table) home loan your regular repayments of principal and interest are initially higher than other types of loans, but will steadily decrease.
Revolving credit loans
A revolving credit loan is like having a large overdraft. To help save on interest you can keep the daily balance of your loan as low as possible by direct crediting your income into the account and then paying for things only as you need to.
