Our Best Variable Rate Home Loan Products
Purchasing a home is a significant long-term commitment and a big financial decision to make. So, when you're looking for the best way to fund your purchase, it's important to ensure that you are comfortable with the package you receive.
There are a large number of home loan options in the market, so it's all about choosing the best one for you. It may be a good idea to seek expert home loan advice so you can navigate your way through the many options available out there.
If you're looking for a great home loan that provides a good amount of flexibility, you may wish to consider securing a variable rate mortgage.
This type of loan provides home buyers with the option to pay off their variable rate home loan over a long period of time and take advantage of lower rates as they happen - meaning that you may be able to save money on repayments when the official cash rate drops.
Features of a variable rate loan
Variable rate home loans are available in two different types: standard variable and basic variable.
Standard variable loans provide home buyers with a competitive interest rate and a large amount of flexibility.
They can also have a number of features, such as offset facilities, redraw, additional repayments, and the ability to split the loan into different parts.
A standard variable rate loan might be a great choice for property investors, as it means that they could possibly redraw money from the loan to put towards the purchase of other investment properties.
There are also basic variable loans. These do not have as many features as the standard variable, but generally have slightly lower interest rates.
Interest rates can fluctuate quickly, and therefore a variable rate home loan does not provide as much security as a fixed rate home loan can. However, a variable home loan is a good choice for those who desire flexibility over security.
Competitive interest rates
As the name suggests, the interest rate for a variable home loan fluctuates over time - this means that it can go either up or down quickly. These fluctuations will affect how much interest you are paying on your mortgage on a monthly basis.
Generally, changes to your interest rate are largely affected by the Reserve Bank of Australia's (RBA) official cash rate decisions.
If the RBA decides to lower the official cash rate one month, banks and mortgage lenders can choose whether or not to pass it on to their mortgagees.
Should mortgage lenders pass on any reductions, you will be able to pay off your mortgage at a lower rate until the interest rate fluctuates again.
It is important to remember that this flows both ways - if the RBA found it prudent to increase the cash rate, you could end up paying more if the banks pass the changes on.
Planning ahead to account for the possibility of higher living costs is one way to mitigate rising rates. If interest rates fall, it's a good idea to continue with your regular repayments at the higher rate as you could save thousands in interest over the long term.
If you're looking to secure yourself one of the best variable home loan rates, contact one of the home Loan Specialists at resi today for professional assistance and expert advice.