fbpx

Your Local Mortgage Broker in Sale, Gippsland

Loan Types

Variable Rate Loan

A variable rate loan is a mortgage product where the interest rate fluctuates based on market conditions. It's known for its simplicity, making it an excellent choice for those who prefer straightforward options. Despite its basic nature, this loan offers flexibility, allowing borrowers to make extra repayments and access redraw facilities as needed.

However, it's essential to understand that the interest rate on a basic variable loan can change over time, potentially affecting your repayments. Additionally, compared to other loan types, such as fixed-rate loans, a basic variable loan may have fewer features like offset accounts or redraw facilities. Let's look at the Pro's and Cons.
Image 1
Image 2

Features:

  • Competitive Interest Rates: A variable rate loan offers competitive interest rates, providing potential savings over the life of your loan.
  • Flexibility: Enjoy flexible repayment options, including the ability to make extra repayments and access redraw facilities, giving you greater control over your finances.
  • Simplicity: With no frills or additional features, A variable rate loan is straightforward and easy to understand, making it an ideal choice for borrowers seeking simplicity.
  • Suitability: This loan is suitable for a wide range of borrowers, from first-time homebuyers to seasoned investors, who prioritize flexibility and affordability.

Pros:

  • Lower Interest Rates: A variable rate loan typically offers lower interest rates compared to standard variable rate loans, potentially saving you money over time.
  • Flexibility: With the ability to make extra repayments, you can pay off your loan faster and reduce your overall interest costs.
  • No Break Fees: A variable rate loan often comes with no break fees, allowing you to pay off your loan early without incurring additional charges.
  • Potential Savings: If interest rates decrease, your repayments may also decrease, providing potential savings over the life of your loan.

Cons:

  • Potential for Rate Changes: As the interest rate is variable, your repayments may increase if interest rates rise, impacting your budget and financial planning.
  • No Rate Certainty: Unlike fixed-rate loans, basic variable home loans do not offer rate certainty, leaving you exposed to potential rate fluctuations and uncertainty about future repayments.
  • Limited Features: A variable rate loan may offer fewer features compared to other loan types, such as offset accounts or redraw facilities, which could limit your financial options.

Need Help Getting Started?

Not sure where to start? Don't worry the team are here to guide you every step of the way. Reach out today for a no obligation chat.

Speak To The Team Today
We’re Here to Make It Easy to Choose the Home Loan That’s Right for You!

Other Types Of Loans

About Image

Variable Rate Loan

    A variable rate loan is renowned for their competitive interest rates.
Read More
About Image

Fixed Rate Loan

    This is where the interest rate of a loan is guaranteed to remain the same.
Read More
About Image

Construction Loan

    May be most suitable if you are building your own home or investment property.
Read More
About Image

Line Of Credit

    Access to the equity in your home or investment property up to a pre-approved limit.
Read More
About Image

Split Loan

    Make part of your home loan a variable rate and part a fixed rate, you decide how much you allocate to each.
Read More
About Image

Guarantor Loans

    A family member uses the equity in their property as additional security against your loan.
Read More
About Image

Bridging Finance

    Bridging finance allows you to use the equity in your existing home to finance your new one.
Read More

FAQ

The frequency of interest rate changes can vary depending on your lender and the terms of your loan. Typically, lenders review their variable interest rates periodically, often in line with changes to the official cash rate set by the Reserve Bank of Australia (RBA).

Variable interest rates can be influenced by various factors, including movements in the official cash rate, changes in economic conditions, lender funding costs, and competition within the mortgage market. Lenders may adjust their rates independently to reflect these factors.

The impact of an interest rate rise on your repayments depends on several factors, including the size of your loan, the term remaining, and the extent of the rate increase. Lenders typically provide examples or calculators to help borrowers estimate potential repayment changes.

Yes, many variable interest home loans offer flexibility, allowing borrowers to make additional repayments without penalty. Making extra repayments can help reduce the loan balance faster and save on interest costs over time.

While variable interest rates are influenced by market conditions, borrowers may have some room to negotiate with their lender, especially if they have a strong credit history or are willing to switch to a different loan product. It's worth discussing your options with your lender to see if a better rate is available.