Difference Home Loan Repayment Options

1)Table Loan

  • This is the most common type of home loan.
  • You pay the same instalment at each payment frequency  

Pros & Cons:
  • You know how much loan payments each month/ fortnightly depense on your payment frequency, so easy for set up budget
  • However the downside is most of your early repayments pay off more interest than principal, while most of the latter payments pay off more of the principal.

2)Straight-Line or Reducing Mortgage

  • Repay the same amount of principal with each repayment, but a reducing amount of interest each time.
  • This option is for people who want to repay the same amount principle therefore pay off their loan faster.

Pros & Cons:

  • Principal can be reduced faster 
  • However because each payment is different, it's difficult to know exact payment amount therefore not good for budget

3)Interest Only Mortgage


  • You only pay interest on the loan amount
  • It's more suitable for investment property mortgage

Pros & Cons:
  • You only pay interest on the loan amount so the principal balance doesn't reduce. Typically interest only loans are for 6 months - 5 years terms, with full repayment due at the end of the loan or the balance is converted to a table mortgage at this time.
  • Each payment will be less than Table Loan option, so can free up some cash. 

4)Revolving Credit


  • Revolving credit Mortgage works like a large overdraft. Your pay goes straight into the account and bills are paid out of the account when they’re due.
  • The interest is calculated daily based on loan balance (not limit). So by keeping the loan as low as you can at any time, you pay less interest 
  • The loan can be repaid and redrawn and no need to apply top up as long as the loan balance does not exceed the limit
  • this option can be combined with other home loan repayment types

Pros and Cons:

  • You can make lump sum repayments and re-draw money up to your limit.