Basic Variable Rate Loans

Break Down

• Basic Home Loans, also know n as 'no frills home loans, Honeymoon Rate'
• Offer you as the borrower a loan facility with a low interest rate, for a set period of time usually 6, 12 months, that it reverts back to the Standard Variable Rate Home Loan, at that period of time.
• Usually a popular choice for first home buyers, as a basic home loan's rate interest rate is often half to one per cent below the standard variable rate, (depending on the particular lender)
• Generally, the 100% offset facility feature is not available on the Basic Variable Rate Loans and the Redraw facility attracts a fee

Drawbacks

• As with everything, there are draw backs, which include, limited features, less flexibility, and additional charges, if you decide to switch loans or pay the loan off sooner
• The disadvantage of this facility is that often the lender will ~lock you~ for a period of upto 4 years after the initial period, meaning that any switch to another product may come at a cost