Variable Rate Loan

Variable Interest Rate Loan

Customers are often attracted by the many beneficial features this loan type offers

That’s why variable rate home loans are one of the most common types of loan offered in Australia

As the title suggests the variable rate loan can change

Typically the interest rates changes when the cash rate set by the Reserve Bank of Australia changes

Other factors can change the interest rate are savings, investment, inflation and competitive pricing

Not all variable rate home loans come with these features, some are for free and some you have to pay for

Variable rate home loans tend to be more flexible:

Flexible repayment options, choose the loan repayment term (30 years) and repayments
Make extra repayments, this can help pay down the mortgage sooner
Attach a 100% offset account to the loan, money in this account reduces interest charged on your home loan repayments
Redraw facility gives the flexibility to redraw any extra funds that have been deposited into the loan account
Some lenders even waive application fees on the basic variable rate loan

If the interest rate increases during the loan, your loan repayments increase too

Could make planning a budget more difficult, if interest rates fluctuate altering loan repayments

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