A basic home loan is a type of loan that trade off flexibility and in return it will offer a low ongoing interest rate, lower or no ongoing fees and often offers a reduced or waived application fee.
This type of loan has minimal features and usually it wouldn’t offer an offset account, repayment holidays, ATM card, cheque book or Bpay. If you’re looking for a loan that is simple and easy to use, then the basic home loan would be the best for you.
Which lenders have basic home loans?
From lender to lender the interest rates and fees that can be offered for a basic home loan will vary, however all the major banks offer similar features for their basic loans. Some common basic loan products are:
- CBA– 3 year special rate saver
- Rams- Basic home loan
- Westpac- Flexi first option
- St George- Basic home loan
- Suncorp- Back to basics
- ANZ– Simplicity plus
- NAB– Base variable
- And many more
Finding the cheapest basic loan?
Finding the cheapest basic loan can be a difficult process, there are many lenders to choose from, however there are several things that you need to consider when choosing the right finance to take.
When it comes to small loan amounts the fees are more important than the interest rates, so make sure you check for any hidden fees, in particular the ones associated with settlement such as legal fees and settlement attendance fees, on the side of those you should also look out for any redraw feeds that may be included by the lender.
Lastly, if you’re a first home buyer, some lender will be able to waive the application fee.
Who is a basic loan suitable for?
A basic loan is more suitable for borrowers, who are loaning amounts that are under $250,000 , they don’t suit all borrowers, if you are borrowing over $1,000,000 you will not receive the same special interest rate discount. Simple loans are best suited to:
- Loan amounts that are under $250,000: With a basic loan you can get an interest rate below the standard variable rate even though you don’t qualify for a professional package discount.
- Don’t need bells and whistles: Why pay the annual package fee for a professional package loan if you are not going to use all of the features it can offer, such as a credit card. That way with a basic loan you will only be paying fees for what you need and want, at a lower cost.
- People who don’t want to change banks: Often with other loan types the loan comes as a package with a cheque account and credit card. Obviously if you don’t want to change banks then there is no point in getting these additional products with your loan.
- Simplicity: Anyone who finds dealing with their money to be too complicated and just wants a simple, easy to use solution should apply for a basic loan.
Please enquire online or call us on 1300 856 846 if you would like to talk with our mortgage broker who can give you expert advice on basic home loan.