A variable rate home loan is one of the most common types of home loans in Australia, and is also one of the most competitive products for lenders to offer. Variable rate home loan interest rates can rise or fall over the life of the loan. As a result of this the repayments will vary as the rate changes take effect. The interest rate offered at the time of the loan application will in some cases vary in the way it may be higher or lower than what the fixed rate products on offer are. With all variable rate loans the interest rate may be increased or decreased according to the market which in turn will vary your repayments each month.
Two types of commonly used variable loans are:
- Basic Variable Home Loan which does not have all the fancy features on offer but in return can offer a lower interest rate and in some cases waive certain fees; or
- Standard Variable Home Loan which usually comes with all the bells and whistles such as 100% offset accounts and redraw facilities which can be appealing to some customers.
Some things that are to be considered when comparing a variable rate home loan with a fixed rate home loan is while a variable rate home loan comes with a large range of features along with added flexibility, there’s always going to be a chance your rate may in some cases decrease or in other cases increase over the course of your loan term. If you are unsure which option is right for you don’t hesitate to talk to your mortgage broker Gerry and he will be able to assist you with providing you with the most suitable option. If you have a question regarding anything at all spoken about in this article or anything related to Variable Rate home loans then click here to talk to your finance broker Gerry and he will be able to assist with answering any questions you may have.