Home Loan Types

May 3rd, 2011 21 Comments
Posted by

A loan is a form of debt incurred when someone, called a lender, lends an amount of money, called the principal, to another person, called the borrower. The borrower is then expected to repay an equal or greater amount of money at a later date. The money is usually expected to be repayed in regular payments of the same amount. 

In the majority of cases, the lender provides the loan at an additional cost, called interest. Without interest, there would be no financial incentive for the lender to provide the loan. In legal loans, all of these obligations are regulated by a contract. Most legal loans, such as mortgages, are obtained from financial institutions such as a bank. 

Loans are often used in major transactions such as home purchases and vehicle purchases since most buyers cannot afford to pay large amounts of money out of pocket. Often, the borrower will be required to put down a deposit on the loan in order to secure it. In cases where the loan to value ratio is high, the lender may also ask that the borrower pay mortgage insurance on the loan. 

There are several different types of loans available including standard variable loans, basic variable loans, fixed rate loans, line of credit loans, combination loans, discount variable loans, lo doc loans, and non-conforming loans. These different types of loans are detailed below. 

Standard variable loan

A standard variable home loan is a loan in which the interest rate changes throughout the duration of the loan. These types of loans may be combined with a package that allows them to eligible for a lower rate. A standard variable loan will also include a mortgage offset account. 

Basic variable loan

A basic variable loan is also a loan in which the interest rate can change throughout the duration of the loan. The interest rate for this type of loan will be similar to that of a standard variable loan, but will usually have a packaged loan discount. Basic variable loans typically have less features than the standard variable loan. 

Fixed rate loan

A fixed rate loan is a loan in which the interest rate is fixed over a set period of time. These loans usually penalize the borrower should they choose to exit the loan before it is set to end. The borrower will have to pay a “break cost,” which can be very expensive. If there is any chance that the borrower will repay the loan early, he or she should not take a fixed rate loan. 

Line of credit loan

A line of credit loan is a loan without a set amount. Instead, the borrower can draw any amount up to the credit limit at any time. There are no set repayments, and the loan will have a variable rate. Payments can be made toward the balance at any time. Some lenders ask that the borrower make at least one repayment each month, while others don’t ask for any payments until the credit limit has been reached. The required payment in the first case must usually at least equal the interest accrued in the previous month. 

Combination loan

A combination loan is an option offered by many lenders in which the borrower receives a professional package. The package includes multiple fixed rate loans, variable rate loans, and line of credit loans. The borrower will then be asked to pay an annual fee for the package. A common type of combination loan involves the borrower receiving a portion of a loan as a variable rate and the remainder as a fixed rate. This offers the borrower the benefit of not having to worry about rate increases on the fixed rate portion while still being able to make extra repayments on the variable rate loan without penalty. 

Discount variable loan

A discount variable loan is a variable rate loan that includes a lower interest rate. This discount will typically be more than the discount received with a packaged loan. The discount is typically valid for one year, so it is possible that this type of loan will work out to be more expensive in most cases. 

Lo Doc loan

A lo doc loan, or low documentation loan, is a loan in which the borrower is not required to provide tax returns or financial reports. This type of loan is most often used by borrowers that are self-employed and don’t have access to such paperwork. Most lenders do require some proof of income, however, which can be in the form of bank statements. 

Non-conforming loan

A non-conforming loan is a loan that does not require the borrower to meet the standard lending criteria. This type of loan is not usually available from mainstream lending institutions. A non-conforming loan is typically given to borrowers with credit problems or a history of late or missed repayments.

 Get more information about home loan types.


  1. Qtgccb says:

    best allergy over the counter walgreen generic allergy pills major brand allergy pills

  2. Proijo says:

    claritin allergy sinus 12hr costco names of prescription allergy pills allegra side effects

  3. Ecllxc says:

    medications used to stop vomiting purchase rulide online cheap

  4. Cruser says:

    order generic isotretinoin 10mg buy cheap generic accutane oral accutane 40mg

  5. Tkgmii says:

    isotretinoin 20mg canada generic isotretinoin 40mg buy accutane 20mg without prescription

  6. Ahjqlq says:

    gabapentin 100mg over the counter buy gabapentin 800mg generic

  7. Sghagw says:

    cost prednisolone omnacortil 5mg pill omnacortil 5mg usa

  8. Tpiqzm says:

    generic prednisolone 5mg omnacortil 10mg usa cost prednisolone 20mg

  9. Fvxxyo says:

    buy albuterol online cheap buy albuterol inhalator for sale where to buy ventolin without a prescription

  10. Dsmled says:

    order albuterol without prescription ventolin pills order generic ventolin 2mg

  11. Yolgkv says:

    buy omnacortil 10mg for sale buy prednisolone 10mg for sale prednisolone 10mg pill

  12. Wbthjz says:

    purchase clomid generic order clomid 100mg generic clomid 50mg over the counter

  13. Mhtgul says:

    oral clomiphene 50mg where can i buy clomiphene cheap clomid 50mg

  14. Ewlxzo says:

    order lasix 40mg generic order furosemide for sale buy lasix 40mg generic

  15. Xeyyfb says:

    furosemide 100mg without prescription order lasix for sale lasix 100mg canada

  16. Yzmiyd says:

    rybelsus for sale oral semaglutide 14 mg purchase semaglutide generic

  17. Ziiocn says:

    purchase rybelsus pills rybelsus 14 mg tablet buy semaglutide paypal

Leave a Reply