When choosing a home loan, it’s important to work out what you want from your loan and how much it will cost you.
Given the wide range of loans on offer – with different interest rates, product features and fees – it pays to shop around to find the loan that fits your needs and circumstances.
From 1 January 2012 credit providers will need to give you a key facts sheet on home loans, if you ask for one.
Key facts sheets will give you the information you need in a set format so it is easier for you to shop around and compare loans. They will also highlight important information such as the total amount to be paid back over the life of the loan.
Most people take out a standard principal and interest home loan, where you make regular payments against the principal (the amount borrowed) as well as paying interest. This type of loan is the surest way of paying off your home loan because regular repayments mean you are steadily reducing the principal.
‘Fixed rate‘, ‘variable rate‘ and ‘partially-fixed rate‘ loans are all variations of standard principal and interest loans. There may be penalties for paying out the fixed rate portion early. See interest rates for more information and to find out how you can split your loan.
You can generally repay a standard loan in full at any time, but you may be charged an ‘early repayment’ fee (also called ‘early termination’ or ‘deferred management’ fee). See fees for more details.