Variable Interest Home Loan

Key features

Variable rate home loans have interest rates that, over the life of the loan, track the interest rate movement set by the Reserve Bank of Australia (RBA).

You are making a bet that interest rates will fall, or will at least stay constant.
There are two types: standard and basic variable.

Standard variable rate home loans often have features that include redraw facilities, portability and ability to make additional repayments. You can also make repayments weekly, fortnightly or monthly, and combine your home loan with another, eg a fixed rate or split loan.

Basic variable rate home loans or 'no frills' loans have lower interest rates compared to standard variable rate loans; however, these loans do not have the same range of features. Basic variables are generally not portable and may not be combined with other loans.

Advantages

If the RBA cuts interest rates your repayments also drop. Variable rate home loans are generally cheaper than fixed rates. The flexibility in repayment without penalty is handy if you want to pay off your mortgage earlier and reap substantial savings in interest.

Considerations

If interest rates go up, the extra rate rise would be charged on a monthly basis and added to the loan, making repayments higher. However, some variable rate home loans can be capped.

Suitable for

All types of borrowers who can allow for a marginal rate increase but wish to benefit if rates decrease.
First homebuyers should ensure they could service their loan should rates increase. Allow for at least a 1% rise in a budget.

Variable Interest Home Loans

Institution	Actual Rate	Comparison Rate *	Institution	Actual Rate	Comparison Rate *
	7.80%	7.90%		7.80%	7.87%
	7.67%	7.80%		7.80%	7.87%
	7.70%	7.91%		7.81%	7.94%
	7.17%	7.17%		7.86%	7.99%

* Comparison rates are based on a loan amount of $300,000 over a 30 year term. Comparison rate schedules are available via each lender’s website or by contacting Compare-Homeloans. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates are effective as of 11-01-2011.

All information provided is a guide only and may not be complete for your purposes. Whilst displayed rates are regularly updated, neither Compare-Homeloans nor the Providers warrants the accuracy of any information and you should confirm it with the Provider before acting on it. Except for responsibilities implied by law which cannot be excluded, neither Compare-Homeloans nor the Provider is responsible for any loss, damage, cost or expense incurred by you as a result of any error, omission, or misrepresentation in relation to the data herein.