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Home Loan Types

Read our guide to every mortgage type, from fixed and variable to less common products like SMSF loans and low doc loans.

Richard Whitten
Richard Whitten

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There are many home loan types in Australia, some of which will likely be familiar. Though there are also some highly specific home loan products you're likely to never have heard of if your situation has never called for them.

This page breaks down all of them for you. And if you're still confused which whether there is a home loan type to suit your requirements, you can also get guidance from an expert mortgage broker.

What's in this guide?

Loan purpose: investor or owner-occupier

One way to distinguish home loan types is by purpose. If you're buying a home to live in, you need an owner-occupier loan. If you're purchasing a property as an investment, then you need an investment loan.

Loans for investors and owner-occupiers often have all the same features and can be either fixed or variable, with interest-only or principal-and-interest repayments. The main difference is investor loans have higher interest rates.

Rate type: fixed and variable

Mortgages with variable interest rates are the most common type of mortgage in Australia, especially for owner-occupiers. They're flexible products but the rate can change at any time.

Unlike variable loans, loans with fixed interest rates won't change for a set period of time (the fixed period). This means your repayments stay the same. After this period, the loan reverts to a variable rate.

It's easier to exit a variable rate loan and refinance to a new mortgage. Exiting a fixed rate loan comes with breaking costs.

Learn more about fixed versus variable loans

Construction loans

When you're borrowing money to build a home, you'll need a construction loan. These loans require repayments at different stages as construction progresses.

Line of credit loans

If you already own a property and have paid off some or all of the mortgage, you have something called home equity. You can use a line of credit loan to borrow against this equity.

This can be a good way to fund a purchase such as a renovation or a holiday.

Bad credit mortgages

It's hard to get an ordinary mortgage if you've had credit trouble in the past. Bad credit loans allow you to secure finance even if you have some negative marks on your credit history.

Lenders who deal in these loans typically take a more hands-on approach to assessing your credit file and take into account the circumstances that led to your poor credit history. However, be aware that these loans often carry higher interest rates.

Low doc

A home loan application requires evidence of your employment and regular income. This is easy if you're a full-time salaried employee (in other words, a PAYG borrower). It's harder if you're self-employed. Low-doc loans exist to help these borrowers.

You can apply for a low doc loan with a letter from your accountant, Business Activity Statements (BAS), income declaration forms or other types of documentation to show your earnings. Interest rates are often higher with these loans.

SMSF loans

Self-managed superannuation funds (SMSFs) allow investors to take control of their retirement savings and invest them in property.

Many lenders offer home loans for SMSF property investment. These loans are structured like normal home loans, though the structuring of the actual SMSF for property investment can be fairly complicated.

Reverse Mortgages

Older borrowers (60 and above) looking to fund retirement costs without selling their home can take out a reverse mortgage. You borrow against the value of your property and when you sell the property (or when your heirs sell after your death), the lender gets repaid.

Bridging loans

What do you do when you've bought a new house, but you haven't sold your old one yet? Or what if you've sold but the settlement dates don't line up, meaning you don't have money to cover the purchase?

A bridging loan will help you cover this shortfall. You pay interest with an interest-only rate and then pay the loan off when your sale is finalised.

More guides on Finder

Home Loan Offers

Important Information*
Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

More info
Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply).

More info
Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.

More info
Logo for Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)

Get a competitive variable interest rate with no application fee or ongoing fees.

More info

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