Want a home loan with more features, flexibility and a competitive rate? Get a variable rate mortgage.
Variable rate home loans are some of the most popular and competitive products on the market. They can offer greater flexibility and generally come with more features than fixed rate loans, but their interest rates can change at any time.
Home Loan Offer
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
- Interest rate of 3.59% p.a.
- Comparison rate of 3.59% p.a.
- Application fee of $0
- Maximum LVR: 80%
- Minimum borrowing: $200,000
Compare variable home loan rates
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Variable rate offers
- loans.com.au Essentials - Variable (Owner Occupier, P&I) - 3.66% p.a. comparison rate. This owner occupier loans features principal and interest repayments
- IMB Budget Home Loan - Special LVR <=90% (Owner Occupier, P&I) - 3.69% p.a. comparison rate. A loan for owner occupiers only.
- UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupied Variable P&I Rate — borrowing $700,000 or more - 3.59% p.a. comparison rate. A flexible, competitive low-fee loan.
A variable rate home loan has an interest rate which can change over time. Your lender might cut the rate due to economic conditions, or decide to raise it. This means over the course of a year, your home loan rate (and your periodic repayments) might increase or decrease. Fixed rate loans don't change during the fixed period, offering more certainty but less flexibility. Variable rates tend to be lower than fixed rates and may have fewer fees.
Watch: Should I get a fixed or variable rate loan?
Consider the following factors when comparing variable home loan rates:
- Interest rates. A lower interest rate means lower repayments. This is easily the biggest factor. It's also a good idea to use a repayment calculator to find out what your repayments will look like with the given interest rate, and also add an extra 1% on top of this to see what your repayments would be should interest rates rise.
- Fees. A variable rate home loan can come with a range of fees, including upfront application fees or ongoing fees, as well as fees to use features including offset accounts or redraw facilities. Ensure that the fees justify the interest rate and features you'll receive with the loan. This is why you should always pay attention to a loan's comparison rate, which takes into account its interest rate plus fees.
- Features. What features you choose to add to your comparison will depend on how you want to use your home loan. If you prefer to have your salary paid into your home loan to minimise your interest charged, you might want to look for an offset account. If you want a home loan that allows you to make unlimited additional repayments, you might want to look for home loans with a free redraw facility.
- Eligibility. Different lenders will put limitations on what types of properties they will finance and the types of borrowers they will accept. Ensure the loans you're comparing are available for your situation, including the type and size of the property, your income source and your loan purpose.
To decide if a variable rate is suitable for you, start by weighing the benefits and risks. This depends heavily on your property needs and strategy.
- Features. Many variable rate home loans come with useful features, such as the ability to make additional repayments, offset accounts and redraw facilities. It's harder to find a fixed rate with these features.
- Easy to refinance. When you opt for a variable rate loan, you have the flexibility to refinance with another lender in order to secure a more competitive deal. With a fixed rate product, however, you need to pay high discharge fees to exit the loan.
- Falling interest rates. If interest rates fall a variable loan will save you money if your lender decides to pass on the cut (they often do).
- Interest rate rise. An interest rate rise on a variable rate home loan would make your repayments more expensive, and could make it more difficult to service your loan.
- Difficult to budget. If your rate is fluctuating regularly, it can be difficult to plan an accurate budget. You might have less money to allocate to other expenses if your home loan repayment rises.
There are a few specific types of variable mortgage rates, with some important differences between them:
- Basic variable rate home loans. A basic variable rate home loan does away with some features offered on the home loans above, such as 100% offset accounts, but in return offers lower interest rates and fees. You can read more about them below.
- Full-featured variable loans. Full feature home loans offer a range of extras and useful features, including 100% offset accounts, redraw facilities and more.
- Variable rate package home loans. Package home loans offer discounted interest rate and fees in return for bundling your credit card, savings accounts and other financial products with your home loan lender. They generally also charge an annual fee, unlike some other variable rate home loans.
- Introductory rate home loans. Introductory rate home loans are variable rate home loans with a special discounted rate which usually applies for the first year, after which a regular variable rate applies. These can be suited to first home buyers or others trying to minimise interest costs in the first year.
If you're looking for a more specialised type of variable home loan like some of the ones listed above, you should consider contacting a mortgage broker to get some free, expert guidance.
Choosing the right type of mortgage is complex. Here are few more specific questions and scenarios that might be relevant to you.