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If you do not want any add on features offered by a standard variable loan then most lenders offer a basic variable loan at a lower interest rate. The lower rate can be offered because the loan is simpler for the bank to administer. This loan is most suited for loans that are uncomplicated and there is little to no ongoing service required

When is it used?

This loan is predominantly used as follows:

• First Home Buyers - when people first buy they often borrow a large proportion of the value of the property. Accordingly all they are looking to do in the first few years is make the repayments.
  
  
• Investors - when you do not need any of the add on features of a normal loan and are looking for a simple product.

Features

Basic Variable loans tend to offer limited flexibility. Whilst you will need to check with each lender they generally offer:

• May be Principal & Interest or Interest Only
• Ability to make extra repayments
• May or may not offer redraw of additional payments.

If you decide you want more features then generally the lender will require you to switch your loan to another one of their loan products or potentially refinance in full.