Reasons to Apply for a Variable Rate Home Loan
Australian lenders provide home loans for all kinds of purposes including for first time buyers to enter the property market, existing owners to move house, renovate or extend their home, fund new builds, refinance or invest and grow property portfolios. Whatever the reason for applying for a home loan, the most common and popular types are variable rate home loans.
The reasons that variable rate home loans are so popular amongst Australian borrowers are the low rates and flexibility that they generally offer. The rate of interest on a variable loan varies according to the rate set by The Reserve Bank of Australia. Although this means that borrowers may end up paying more when rates go up, when the Reserve’s rate decreases repayments become more affordable. Variable rate loans also offer a degree of flexibility, access to funds, options to change the package and combine with other loans and bank accounts.
Money Choices presents all the key information on the best deals from leading lenders, allowing you to find the perfect loan to suit your lifestyle and financial habits.
Variable Rate Home Loans Features and Benefits
When you use Money Choices’ free online service to compare the best variable home loan deals there are a number of key features you should take into consideration.
There are two main types of loan to choose from: basic variable and standard variable home loans. The main advantage of basic loans is the low rates of interest they boast when compared with most other loan packages. The disadvantages are the reduced features and flexibility that standard variable loans offer. This may mean that the loan can’t be combined with other loans and accounts, and charges are incurred to use extra features.
The most popular home loan in Australia is the standard variable home loan. These loans offer the flexibility to make extra repayments, access funds, and enjoy other features without fees. Some standard variable loans can be divided into separate parts, with a percentage of repayments on a fixed rate and the rest variable.
The interest on variable home loans changes according to the rate set by The Reserve Bank of Australia. Payments may go up if rates increase, but you will start feeling the benefits when interest rates drop. Money Choices helps you identify the best deal to suit your circumstances and habits, so you can start saving dollars today.
Variable Rate Home Loans Suitability
If you want to enjoy the lowest rates and you’re comfortable with reduced features a basic variable rate home loan is suitable for you. If you prefer the advantages of extra features with low fees, flexibility and access to funds, a standard variable rate home loan is the best choice. While looking for the perfect package there are steps you can take to ensure that you are properly prepared to take out your loan.
To calculate how much you should borrow and how long it will take you to repay the loan, take a look at your accounts and work out all your monthly income and expenses. Repayments should never exceed one-third of your total pre-tax repayments, so use this as a guide to the size and length of loan to apply for.
You will need to pay an initial deposit on the deal and most lenders require at least 5% of the total loan. It’s in you interest to be ready with more, ideally 10% to 20%. The more deposit you provide the cheaper and quicker repayment will be, potentially saving you a huge amount of cash.
Enquire Online
Money Choices’ free service takes the headache out of comparing variable rate home loan deals from leading Australian lenders. Having compared the best deals, you can apply today free of charge, no risks and no commitment, speak to a trusted mobile banker and decide which variable rate loan suits your financial requirements. The sooner you set up your home loan the sooner you can start saving money, enjoy the benefits and confidently make plans for the future.
