Variable Interest Rate Home Loans
Variable interest rate home loans come in two forms, standard variable and basic variable. Both of these variable home loans work in a similar way but the main difference is the interest rate charged and how much flexibility is available. More information about the differences between the basic and standard variable home loans is on our variable home loans page.
A variable interest rate home loan is affected by economic conditions both within Australia and around the world, so you can expect your home loan repayments to rise and fall over the term of your loan.
Variable interest rate home loans Pros
- Your home loan repayments will fall when interest rates fall
- You will have the opportunity to reduce your home loan balance faster
- Can be very flexible and will often allow unlimited additional repayments
- The average variable interest rate is generally lower than a fixed home loan rate
Variable interest rate home loans Cons
- Your home loan repayments will rise when interest rates rise
- If interest rates rise quickly, your home loan repayments over a certain period of time may be more than those of a fixed interest rate home loan over the same period of time
- If you have borrowed at or near your repayment capacity, it is risky if interest rate do rise
Variable Home Loan Differences
Basic Variable
- Low interest rate (lower than a standard variable loan) no frills loan
- Rate is variable so it moves in line with Reserve Bank changes
- Limited features (e.g. usually no access to offset facilities & more expensive redraw if at all)
- Most allow extra repayments
- Most have terms of 25 or 30 years
Standard Variable
- The most popular type of mortgage
- A higher interest rate than a basic variable home loan
- Interest rates can move up or down which will cause your repayments to increase or decrease with the move
- It is more flexible than a basic variable mortgage thus allowing you to make extra repayments without penalty as well as offering other features
- Most have terms of 25 or 30 years
What you need to know:
Terms and conditions, fees and charges, normal lending criteria apply. New clients only, and may be withdrawn at any time. LVR < 75% and for loans $200,000 or more.
Annual fee from $330 applies. Comparison rate based on a loan of $150,000 over 25 years.
WARNING: The comparison rate is true only for the example or examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate. A comparison rate schedule is available on our website.Terms and conditions, fees and charges, normal lending criteria apply. Details available on request.
