Generally the following types of loans are offered by the lending institutions:
 Variable Rate Loan
A variable rate loans means that your interest rate is directly linked to the base home loan rate. This rate can fluctuate according to the prevailing conditions of the market. For example, if the base rate increases by 0.5% your interest rate will also increase by 0.5%.
Fixed Rate Loan
With a Fixed rate loan your interest is fixed for a certain period of time, usually one to years. This rate is generally a bit higher than the variable rate loan because you are premium for being protected against a potential rise in the base rate. The fixed rate loan will also give you certainty and allows you to plan your expenses as you know exactly what you’ll be paying on a monthly basis. The downside is that you will not benefit from any decrease in the base rate.
Capped Rate Loan
The capped rate loan means you have put a “cap” or a ceiling on the interest rate you pay when interest rate go up, but still being able to benefit from decreasing interest rates. You will usually pay a premium for this type of loan and not all banks will offer a capped rate loan.
First Time Home Loan
This type of loan is available to qualifying first time home buyers who are unable to pay the customary deposit on a home. It means the buyer can borrow more than 100% of the property allowing various costs such as transfer and registration fees to be included.
Step Down Loan
A step down loan means that you agree with the bank that your interest rate will decrease by a set percentage every six month for the period agreed (usually 5 years). It doesn’t matter if the base rate increases or decreases during this period, your interest rate will still go down as per the agreed percentage.
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