What is a Variable Interest Home Loan
Variable rate home loans are home loans with interest rates that can change throughout the loan’s lifetime. Fluctuations of your interest rate can occur depending on the market and changes made to the official cash rate set by the Reserve Bank of Australia (RBA). This means that when your interest rate rises and falls, so does your mortgage repayments.
Identifying Features of a Variable Interest Home Loan
If you’re looking for a more flexible home loan or a loan product with more features, then a variable interest loan might be for you. While parts can vary between lenders, they generally include the following:
Most variable home loans will have an offset account, like a savings or transaction bank account linked to your mortgage. Like any bank account, it allows borrowers to reduce their payable interest rate over time. Money paid into your offset account is included when you or your lender calculate the interest owing on your home loan.
This type of loan allows you to make additional repayments on top of your monthly repayments with no charge. This can enable you to get ahead of schedule and get you closer to paying off the mortgage faster while reducing the total interest repayments you make.
Redraw facilities can allow borrowers to withdraw any additional home loan repayments you’ve made, enabling you to reduce your interest charges, knowing that you can access extra funds if you need to.
While shopping for your loan product, some will package variable interest home loans with other financial products like a line of credit or credit card. Therefore, a package could save you money, as you typically will be charged a single loan account fee to cover all products within the package.
Variable rate mortgage vs. Fixed rate mortgage
Unlike fixed rate home loans, variable home loan rates offer more flexibility than fixed rate loans. On the other hand, fixed rate loans will have a set interest rate for a period, which reverts to the standard variable rate after one to five years.
Depending on your financial situation and loan goals, a variable interest home loan can give you the following benefits:
- Potential to save money when interest rates from
- Greater flexibility on the repayment terms and features
- Ability to refinance to a different loan product or lender
*That being said, this type of loan has less predictability in budgeting your repayments or leads to increased repayments if interest rates rise.
Why Choose Rateseeker to find the best variable rate mortgage?
Always on hand and ready to help at all times, believe us when we say our mortgage brokers practice what we preach 100%.
Whether you’re a long-term investor or a first-time buyer, our mortgage brokers will find a variable rate home loan product that best meets your requirements and has features that best align with your lifestyle. Our specialists offer competitive rates, transparent customer service and strong support from start to finish, but we go beyond being a mediator between you and your lender. We like to consider ourselves as financial advisors, not just mortgage brokers working with you one-on-one to help you obtain a clearer picture of how to build your credit score. We ask the right questions, learning everything about your lifestyle and your loan goals, so we find the right loan product the first time around. Rateseeker provides:
- Accessible, prompt service
- A reliable support team of licenced mortgage brokers
- Collective experience of more than 20+ years
- Communicate with you via phone, email, online chat, so you have access to us at all times
- Clear, concise and transparent communication
Our team is also always available to help you out. If you’re ready to work with us, don’t hesitate to reach out today.