What is a basic home loan?
Basic home loans are a simple and cheap loan with only basic features. 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:
- Simplicity loan
- Rate Saver
- Base Variable
- First Option
- Back to Basics
- Mortgage Simplifier
Basic home 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.
It is worth noting that some lenders offer free redraw with a basic home loan as long as this was done using online banking, without any minimum redraw amount to be taken out at any one time. Further, there are 2 lenders who offer a 100% offset account with a basic home loan.
Basic Home Loan FAQs
Some lenders offer small discounts on advertised basic loans. 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.
You can get a basic home loan with no LMI with most lenders if the LVR is below 80%. There are a select number of lenders who will lend you to 85% LVR with NO LMI with a basic home loan. There is also 1 lender who will charge a risk fee instead of LMI which making it cheaper for you to enter the property market for a good borrower.
You can switch from a basic loan to another type of loan 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.
Only 2 lenders will offer a basic home loan product with an offset account. Hence these lenders offer the perks of a cheap interest rate with an offset account. This is a very popular product especially with investors or people wanting a very cheap rate with an offset account.
It is possible to get a low doc basic home loan at normal home loan rates. This type of product and loan is available with several different institutions. In addition to this, there are some lenders who will not charge extra on the interest rate for this type of loan.
At Mortgage Providers, we have access to all types of basic home loan products from different lenders. we are familiar with the features on offer as well as the pricing attached to each product. we can guide you through to the most flexible basic home loan product at the cheapest rate.