What is the Advantage of the Variable Interest Loan?
The variable interest loan offers several advantages over its fixed-rate counterpart. The difference is that the fixed rate delivers reliability while the variable poses one big risk. Mortgage House presents three advantages the variable interest loan offers.
No Penalties for Early Payoff
Financially adept individuals opt for the variable rate because they intend to pay it off as soon as possible. The variable rate loan allows recipients to do so without penalty. Lenders are at liberty to alter rates according to the actions of the Reserve Bank of Australia. Since lenders do not incur penalties, neither does the client.
Eligible for Refinance
Lenders negotiate a fixed rate with wholesalers to fund the fixed-rate loan. This isn’t the case with variable loans. Variable rates allow lenders to set the rates according to their business needs. So, clients can request to refinance home loan when rates fall in their favour.
Save Money if Interest Rates Drop
In some ways, a variable loan is like playing roulette; it’s a game of chance. Nonetheless, if rates drop, the variable loan holder benefits. As long as rates remain lower than their original term, they save.
Variable Interest Loan Advantages Conclusion
It’s no secret that the variable interest loan gave Australians a good scare in 2009. Since 2009, the Australian government has made it a point to help stabilise the economy. Plus, rates don’t make exaggerated jumps often. In many ways 2009, was an out-of-the-ordinary event. For more information about the advantages of a variable rate loan, contact our loan specialists at Mortgage House.