No frills home loans (with competitive rates)

The basic variable rate home loan is the simplest of the loans. Sometimes called ‘no-frills’ loans, the basic variable rate typically comes with few features but good interest rates as a way to make up for the lack of extras found in other loan varieties.

No frills home loans are favoured by first-time home buyers and by those who are looking for a loan that is easy to understand. Buyers with strict budget parameters also like the no frills rate loan due to its lower payments.

Basic variable rate home loans used to by property

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What exactly is a basic variable rate?

A basic variable rate or no-frills home loan has a variable rate with no other fees. It contains the essentials that will ensure your repayments are kept to a minimum. It is flexible because you can make extra payments if you'd like. At the same time, you can still access any available funds that you need.

This home loan is useful for investors and owner-occupiers or potential homeowners. It should not be confused with a standard variable loan, which is also simple but has extra features.

A basic variable rate home loan has lower interest compared to those of a standard variable home loan. Typically, its repayments are much lower, which is why beginner investors and new homeowners opt for this type of home loan.


  • Your repayment amount can fall if interest rates lower due to the variable rate
  • Having an option to redraw will reign in any spending of excess funds
  • The length and total cost of your mortgage can lower should you take advantage of the option to make extra payments
  • The interest rates are normally lower than other types of loans


  • The lack of offset accounts
  • Variable interest rates mean your repayment amount may increase if there is a rise in interest rates
  • These loans are usually inflexible

Why would you need a basic variable home loan rate?

With several home loan options out there, how do you know that a basic variable rate is for you?

For most people, they choose this type of home loan because of the low-interest rate and fees. Despite not having many features, it is a good option for those who simply wish to borrow money to fund their home purchase.

  • Do you want a low-interest rate with lower repayments than most other loans in the market today? If your answer is yes, a basic variable home loan rate is worth checking out.
  • If you are looking for a home loan that has no fees, such as monthly account and establishment fees, then this type of loan may be right for you.
  • A basic variable loan is a popular choice, mainly because of its cheaper rates. In Australia, a basic loan is often 0.7% lower than standard variable loans.
  • Another reason why you may want to choose this type of home loan is due to the ability to redraw funds without a fee.
  • Flexible repayment options are also a huge benefit. You can pay the loan weekly, monthly, or fortnightly. Additionally, you can select whether you want a principal and interest loan or one that is interest only.
  • You may be able to pause your repayment schedule if an emergency arises, such as during a paternity or maternity leave. You can own your home sooner with this loan when you make extra and early repayments. It also has a redraw facility, which can be helpful for the borrowers.

Why you may want to look for another home loan

A no-frills loan may have low-interest rates and flexibility. However, it may not be the right option for you. Be sure to consider the following points before you take out this loan:

  • Although flexible when it comes to repayments, it lacks features that other home loan options have.
  • Because the interest is variable, it denotes that the rates can change. There is no way of knowing whether or not the interest will go up or down. At the same time, repayments are affected when the interest rates increase since they can increase as well.

A basic variable rate loan is not perfect for all situations. To make sure that it is the right type of loan for you, check the terms and conditions that go with it.

The simplicity of this loan makes it attractive, along with the low rates. However, the interest rate should not be the only thing to consider when choosing your home loan.

If you are unsure if this loan is right for you, let the experts at Quantum Finance Australia help. We often recommend basic variable rates to first-time homebuyers who want to keep the costs down.

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