Variable Home Loans
What is a Variable Home Loan?
Variable loans continue to be a popular option in Australia due to their extra features, repayment flexibility and as well as the continuing trend of low Australian interest rates.
Variable home loan interest rates increase and decrease in accordance with fluctuations in the rates set by the Reserve Bank of Australia (RBA). If interest rates go up, mortgage repayments increase; if they go down, mortgage payments are reduced. While RBA rates are a guide, lenders are entitled to set their variable rates independently as they could also be influenced by the bank wholesale market.
With a variable rate loan the interest rate and regular repayments might vary throughout the life of the loan. At times the interest rate could be higher than for a fixed rate loan and at other times it could be a lower.
Benefits of a Variable Home Loan
A benefit of most variable loans is the ability to make weekly, fortnightly or monthly repayments and without facing penalties for making additional payments or for paying off the loan ahead of time.
Most variable loans may also include the addition of an offset feature to the loan, allowing the borrower to reduce the amount of interest paid over the life of the loan and the ability to shorten time taken to repay the loan. Another feature of variable loans is the addition of a redraw facility which could allow borrowers to easily adjust to life’s changes. Redraw facilities offer any amount paid in advance in order to meet an unexpected expense or take advantage of an investment opportunity. These features vary and fees may apply depending on the lender.
Variable loans are generally low fee or fee free and they could usually be transferred from one property to another, subject to conditions.
Because of the many variables, it’s very difficult for people who examine variable loan comparison rates to determine whether they’re actually comparing apples with apples. You may not have access to a wide variety of options and it could be a challenge to compare the many conditions, fees and charges.
How Can Nicheliving Home Loans Help?
Our finance consultants at Nicheliving Homeloans are always available to clarify and advise you on your queries related to fixed, variable or other loans. We have the technology and know-how to analyse a range of options before coming up with a recommendation to suit your needs. Give us a call on 9483 0099 and we’ll show you what we can do for you.