Basic Home Loans

These loans are a simple and cheap loan. Commonly known as a ‘no frills’ loan, they are usually priced approximately 0.6% cheaper than a standard variable.
Basic home loans are known for their basic features and are commonly referred to by lenders as:

1. Simplicity loan
2. Rate Saver
3. Base Variable
4. First Option
5. Back to Basics

These loans generally come without any savings accounts attached, credit cards, cheque books, or offset accounts. The features generally are a pay per use type. For example, most lenders will generally charge you a redraw fee if you wished to take out excess money you have put into this type of loan, with a minimum redraw amount to be taken out each time.

With the introduction of lender competition into the market in the mid to late 1990’s, some lenders began to make this product a little more flexible. For example, some lenders began to offer free redraw as long as this was done using online banking, without any minimum redraw amount to be taken out at any one time.

Can I get a discount on a Basic loan?

Some lenders also began to offer small discounts on the advertised basic loans in the late 1990’s. Many also did this in conjunction with offering a No Application fee special with the product, or without any ongoing fees for the life of the loan. These loans are still very popular today accounting for approximately 28% of loans written.

Can I switch from a basic loan to another type of loan?

This is possible with the majority of lenders. It is worth noting though, that a switching fee could be applicable depending on the lender you are using. This fee can range from $0 – $600.

Can I get an offset account with a basic loan?

Only one lender will offer this type of product. Hence this lender offers the perks of a cheap interest rate with an offset account. This is a very popular product especially with investors.

Can I get a low doc loan with a basic loan?

This type of product and loan is available with several different institutions. Even using low doc, some lenders will not charge extra on the interest rate for this type of loan.