Home loans in Australia are normally available in two forms. Either a borrower goes for the fixed rate or for the variable or floating rate of interest attached to such loans. The borrower can select the type of loan which he or she thinks is best suitable for the purpose of getting a new home or renovating one.
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A fixed interest rate loan is a type of loan in which the interest rate charged on loan remains fixed for that loan's entire term, no matter what market interest rates do.
This implies that the borrower's payments will be the same for the whole time.
For the fixed rate loans in Australia, the interest rate is fixed commonly for a period between 1 to 5 years, but longer fixed rate terms also exist.
After this period, the rate will revert to a variable rate, unless the borrower enters into another fixed-term contract.
Banks and other lenders charge equal interest rates on both home loans and property loans.
However, the home loan interest rates are a few percentage points lower than the land loan interest rates.
Plot loans are generally riskier and thus priced higher than home loans, where banks have a promise that, if necessary, they can sell and recover losses quickly.
