Variable Rate Home Loans
With a variable rate loan, your interest rate goes up and down, based on the Reserve Bank’s official interest rate and your lender’s pricing.
Pros — What’s good about a variable rate home loan?
- It can drop. If the Reserve Bank lowers official rates, your rate will usually drop with it. So you may end up paying less, over time, than you expected.
- You can make extra payments. Because the loan is flexible, you can make extra payments if you want, and pay your loan off sooner.
- You may have access to a redraw facility. If you make extra payments, you can take the extra out at any time, so you always have a bit of a buffer.
Cons — What’s bad about a variable rate home loan?
- Your repayments may go up. If the Reserve Bank puts official rates up, your rate and your repayments go up too.
- It’s harder to budget. Because your repayments may vary each month, budgeting is a little more difficult.
- Great rates = less flexibility. Some of the more basic variable interest rate loans have excellent rates, but offer less flexibility.
Still have questions about variable rate home loans?
If you have any questions about variable rate home loans that aren’t covered above (in fact, even if they are!), please feel free to give us a call on 1300 883 292 or enquire below, and we’ll call you.
