| Standard Variable Product |
Generally provides the most features and flexibility. The standard variable rate is often not the most cost effective option for borrowers unless it is taken as a part of a professional or discount package. |
| Professional Package or Discount Package |
Lenders offer interest rates that are less than the standard variable rate to those with higher incomes, or higher loan amounts or are a part of a recognisedproduct These profession i.e. medical practitioner or solicitor.
These packages usually provide the borrower with one or more fully featured loan accounts, a transaction account and a credit card with various discounts across all facilities
The transaction account can also be an "offset facility".
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| Basic variable or no frills product |
These loans usually have limited features but a lower interest rate i.e. they are a cheaper facility for the lender to administer due to the reduced facilities, so they can offer a cheaper interest rate. These products may be a good option a borrower who isn’t eligible for a Professional or Discount Package. |
Honeymoon and Discount Variable Products
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This product offers the borrower a cheaper interest rate for the first year or two, then revert to the standard variable rate later.
They can be useful for borrowers who are wishing to pay less in the first year to help them manage the cost of a new home.
These products can be more expensive in the long run because the reversion rate is higher than a basic or no frills product. Also, there are often break costs if you wish to or need to refinance the loan within the first few years.
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Lines of Credit
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This product has become very fashionable in the last few years because they offer the borrower a high level of flexibility. Only Interest repayments are required by the lender – no reduction in the principle.
These are excellent products if used correctly. A borrower who doesn’t need the flexibility provided may end up paying a premium for the facility.
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Fixed Rates
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A loan with an interest rate that will not change during the specified time frame. The amount of additional repayments is usually limited. This product is inflexible and break costs may be incurred if the borrower needs to exit the loan before the fixed rate time frame has been reached.
Again, an excellent product if used correctly. Those who need peace of mind when doing their family budget may benefit from a fixed rate. However, history shows that choosing a fixed rate to protect against interest rate increases may not work in the borrowers favour.
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