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Variable
rate home loans are subject to interest rate
movements.
They can
change when the lender chooses to increase
or decrease the rate, generally in line with
the Reserve Bank of Australia's cash rate.
There
are many types of variable rate loans on the
market, all of which offer different degrees
of flexibility when it comes to
-
upfront and ongoing fees,
- the
cost of accessing extra repayments made into
your loan - the redraw facility
-
features attached to the loan such as an
offset account
There a
a number of variable rate loans available
and the can be classified as follows;
-
Basic Variable Loans
-
Professional Packages
-
Line of Credit or Home Equity Loans
What to watch out for:
▪
Additional repayments
are excellent for reducing the interest paid
and the loan term
▪
Fees – look for loan
products with no upfront and ongoing fees
▪
Minimum redraw amount –
look for low redraw minimums and are free
▪
Number of redraws – look
for unlimited redraw transactions
▪
Lenders allowing direct
salary crediting into your loan account so
you can redraw the funds
as you need them
Advantages
▪
Very flexible and allow you to make extra
repayments with out penalty
▪
If interest rates go down your repayments
will be less
Disadvantages
▪
If interest rates go up your repayments will
be higher
▪
Not all variable loans are the same so be
wary of the fine print
Compare Variable Rate Home and Investment
Loans
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