About Variable Rate Home Loans
When it comes to saving money, our variable interest home loan can potentially leave more money in your pocket and it provides the opportunity to pay off your mortgage faster.
Variable home loans can be of two types: basic and standard. A standard variable home loan is more full-featured and gives you additional features:
- Redraw & offset facilities
- Ability to make extra repayments
- The option to split your loan.
At Mortgage House, we offer both types of loans and you can compare our range of variable-rate mortgages below.
The variable home loan interest rate is generally lower than that of a fixed rate mortgage
Your actual home loan repayments will normally be lower than for a fixed rate mortgage
You can usually make extra repayments without penalty with a variable interest rate, which gives you more flexibility
You usually have access to a redraw facility on variable home loans, which further reduces your interest payments
Attractive introductory interest rates are usually only available on new variable interest rate home loans
Your regular repayment amount is not fixed, which brings uncertainty when it comes to budgeting for mortgage payments
What is a variable rate loan?
Variable rate mortgages are one of the most popular kinds of loans in Australia. This is great news for those on the lookout for mortgages, as it means lenders are keen to compete for your business. Variable mortgages are mortgages that have an interest rate that can go up and down over time. The other main type of mortgage available to Australians is a fixed rate mortgage which, as the name suggests, has the interest rate locked in, usually for between one and five years. Variable rate mortgages can give you more flexibility and services, and can also potentially leave you with more money in your pocket, with loan repayments normally lower than a fixed rate loan. It also provides you with the opportunity to pay your loan off faster if you wish, potentially saving more money over the long term. At Mortgage House we offer both kinds of loans, and can talk you through which options can help you reach your property goals.
How does a standard variable rate loan help me?
There are two types of variable rate mortgages – basic and standard. The main difference is a standard variable rate home loan is more flexible and can offer you a lot of additional features and services. Among them is the ability have redraw and offset facilities, which can be handy as you go through life and need to access extra money. You can also make extra payments with standard variable loans, without being penalised or being charged extra fees. Finally, a standard variable loan allows you to split your loan into variable and fixed, if circumstances change. This can help with budgeting and can give you the peace of mind of knowing exactly how much your repayments will be for part of your loan.
Why do variable interest rates change?
There are many reasons why the interest rate of a variable loan can change, and it all comes down to the lender. The most public reason is an official rate change from the Reserve Bank. The Reserve Bank meets monthly, and discusses whether or not to change the official cash rate. The cash rate is how much the Reserve Bank charges lenders for overnight loans, and if they increase that rate, lenders often respond. When the Reserve Bank decreases the rate, there is pressure on the major lenders to do the same. However, that isn’t always the case. Recent times have seen the major banks and lenders move independently of the Reserve Bank, which takes into consideration international events, and the state of the Australian economy when making its decisions. The Reserve Bank is keen to grow Australia’s economy, without overheating it. Bank and lenders can also react to their own lending costs or regulation changes, and even pressure from their shareholders to increase their own financial positions. If your bank or lender does increase your variable rate, and they will give you plenty of warning when they do, that can be a good time to shop around and see what other variable mortgages are suitable. You can compare our variable rate mortgages to see how they stack up with what you are currently being charged. Then, get in contact with us and we can give your current loan a free health check.
What kind of loans can I get a variable mortgage with?
You will find variable rate mortgages across a range of our different loan types. If you are buying your first home, second home, or even third home, a variable loan can be the right option for you and your family. If you have decided to buy an investment property, combining the equity in your current home with an investment loan can be a real winner. And if you are building your home, one of our construction variable rate loans can take a lot of stress out of building. There are variable mortgage options dotted across most of our loan types, so take a close look and compare what we can offer, and check out our very competitive rates.
How do I compare variable loan options?
Comparing variable rate mortgages can be tough, given the amount there are on offer. The first thing to remember is that a lot of the attractive introductory interest rate offers can be for new loans only. That’s important to note, especially if you are looking to refinance your existing mortgage. At Mortgage House, you can compare up to five home loans side by side online at any one time, allowing you to see immediately how our loans stack up against what the banks and other major lenders are offering. We think you will be surprised by what you find. The first thing to take into account is, obviously, the interest rate. Use our calculator to work out what your repayments will be, and don’t forget to add an extra bit of interest rate room to help you see what you might be paying per week or month if rates rise.