Variable Home Loans
The Value of Variable
Loans, like clothes, shoes and cars come in all shapes and sizes with all different benefits and conditions depending on where you shop. There are a limitless number of loans available today for individuals with all different types of credit history and borrowing capacities. The nice thing about having so many choices in Australian loans is that you can shop around and come up with a loan that offers the best advantages at the most reasonable and affordable price.
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What is a Variable Loan? - A variable interest rate loan is a type of loan where the interest rate changes based on the changes in the market rates. When the market rates go up the interest rates for the loans go up and when the market rates go down the loans rates also go down. The interest rates are charged on the outstanding balance of the loan which means that each month your payments may vary depending on these changes. While this potential savings is appealing to some others want to opt for a more predictable loan that offers the continuity of a set payment amount.
The Benefits of a Variable Loan - While it may seem risky to some to leave your circumstances up the ever changing market, studies have shown that overall those that have variable loans pay less interest overall than those that opt for a fixed rate loan. The value of a variable loan really depends on the market. If the interest rates are at an all time low borrowers who have a variable rate will reap the benefits of the low rate until the time that it rises which means money savings for them. The risk comes with the length of the loan agreement. If you have a 30-year variable interest rate loan the market is sure to fluctuate significantly over that period of time increasing your risk of paying more in interest than if you had a fixed loan.
The nice thing about a variable loan is that you can usually opt to make changes to your loan and lock it in to either a variable or fixed depending on the market trends. Before entering into any loan arrangement make sure that you understand the terms of your loan to ensure that you are able to have the freedom to make changes as you see fit.
Popular Australian Variable Rate Loans - There are several lenders that offer variable interest rate loans in Australia. Many of these not only offer loan options but other services and benefits that appeal to many of the potential borrowers out there looking for that perfect home loan. These are just a few examples of the many options available.
National Australia Bank (NAB) offers an introductory one year variable rate loan at a 6.58% interest rate with a 5% minimum deposit with the option of redraw and extra repay for those who qualify. This same bank also offers an introductory three year variable rate loan at a 6.87% interest rate with a 5% minimum deposit 100% offset, redraw and the option for extra repay without penalty.
St. George Bank offers an Advantage Package variable home loan with various other benefits that include discounted variable rates, no application fee and early repayment option with a 5% minimum deposit and 6.85% interest rate. Additionally they offer an introductory fixed one year rate at a 6.94% interest rate with a 10% minimum deposit and a variety of other benefits such as early repayment.
The Commonwealth Bank of Australia is another lender that offers a CBA Wealth Package home loan at 6.91% interest rate combined with a banking service which includes a line of credit and a credit card and transaction account with one annual fee.
Citibank Mortgage plus Professional variable loan has a 7.08% interest rate, a 10% minimum deposit and offers benefits such as early payoff, an interest only payment feature and the option of splitting your loan into four different loan accounts to maximize the benefits offered through the lender.
