What is the difference between a basic variable rate loan and a standard variable rate loan?

I get asked a lot on this question as customers were generally attracted by the basic variable rate loan, but they liked the features offered from the standard variable rate. Some lenders also heavily promote their basic variable rate loan, and later recommend customers to the standard variable rate loan with a higher margin. What made this even more challenging are most lenders name their home loan products differently to make it harder for people to compare apples to apples. For example, Westpac has the basic variable rate loan called Flexible First Option, and their standard variable rate loan is called Rocket Repay, compared to BankWest, their basic variable is called Premium Select, and standard variable called Complete Variable. It is difficult for customers to tell the difference if they aren’t familiar with the products. Basic variable home loans, or so called a no frill home loans, offer less features compared to a standard variable rate loan, but have lower repayments. The basic variable rate can be lower than the standard variable rate, sometimes as much as 1.50% per annum. A standard variable rate loan is often promoted as a full featured home loan with all bells and whistles attached. Most include features such as offset account, redraw facilities, extra repayments and the ability to split a home loan into multiple accounts. In order to access these features, however, the borrower generally pays a higher interest rate with an annual package fee. Most commonly requested feature in a home loan is the offset account. It is mainly available in the standard variable home loan and rarely seen in a basic variable home loan. So the key difference between a basic variable rate loan and a standard variable rate loan is asking yourself if you need an offset account.