Variable Home Loans

Variable loans are among the most popular home loans in Australia due to their extra account features and repayment flexibility, as well as the fact that Australian interest rates have been relatively stable for some time.

Variable home loan interest rates increase and decrease in accordance with fluctuations in the rates set by the Reserve Bank of Australia (RBA). If interest rates go up, your mortgage repayments increase; if they go down, your payments are reduced. While RBA rates are a guide, lenders are entitled to set their variable rates independently.

There are two types of variable home loans:

Standard variable

These loans are popular because they offer features designed to help you pay off your loan faster such as redraw facilities, extra repayment options and access to a line of credit.

Basic variable

These loans generally offer fewer features and less flexibility than their standard counterparts, but make up for the lack of bells and whistles by providing lower rates - sometimes as much as 0.5% p.a. - and therefore lower repayments.

Key benefits:

  • Unlike a fixed home loan that locks you into paying a set rate for a term of between one and 10 years, if you have a variable loan and interest rates go down, you can save thousands of dollars and shorten the life of your loan.
  • Other home loans often charge hefty fees for extra repayments or refinancing.
  • Interest rates across various lenders are highly competitive so it's definitely worth shopping around for the best deal on your variable home loan.

Whether you're opting for the standard or variable home loan, in the current market where competition is stiff for your business, you may also be able to negotiate a slightly lower rate.

Compare variable home loans from leading lenders at iSelect.