Best variable rate home loans – turn on the offset

How we calculate Home Loan Finder Scores

Read full methodology

What different scores mean

9+

Excellent

These variable rate home loans offer low costs, coupled with a host of features, giving the best overall value.

7+

Great

These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.

5+

Standard

Usually the home loans would offer above average rates. They may still include some competitive features.

0+

Basic

Higher costs and/or fewer features.

What is Finder Score?

The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.

Read the full Finder Score breakdown

How to compare variable rate home loans

Don't settle for a third-rate home loan. Make sure you get the best variable rate home loan deal by looking at 4 things:

1. The interest rate

The interest rate determines how expensive your repayments will be. The lower the rate, the better.

2. Fees

Most home loans have some fees, but some have almost none. The key ones to watch out for are application fees, monthly fees and settlement fees.

3. Loan purpose

If you're looking to finance an investment property then you will need an investment loan.

If you're buying (or refinancing) a loan for your home then you need an owner-occupier home loan.

4. Loan features

Variable rate loans come with the most features. You can make extra repayments to pay the loan off faster. And most variable rate loans have a redraw facility too.

Some variable rate loans have an offset account, which functions like a bank account. But instead of earning interest on the savings it reduces your loan's interest charges and gets you out of debt faster.

If you have a variable loan, it's a great idea to also have an offset account. While that can mean extra costs, it allows you to offset your savings against your loan and can save a lot in a high-interest world.

Graham Cooke
Head of consumer insights

Is now a good time to get a variable rate home loan?

• The lowest variable home loan rate right now on Finder is 5.69%.
• The average variable home loan rate on the market is 7.48%.

There's never really a "best" time to get a variable rate home loan. When rates are falling, variable rate loans can work out better.

Fixed rate loans are great when rates are rising fast. That was the case in 2022–23. But now rates have stayed where they are for a while, and it is unclear whether the next move will be a rise or a fall.

When deciding between fixed and variable it's more important to think about how comfortable you are with the current rate and whether you can afford more rate rises.

What's the difference between fixed rate and variable rate home loans?

Variable rate mortgages...

• Go up and down over time. Lenders can change your rate at any time (usually when the RBA changes the official cash rate). Lenders increased their variable rate loans 8 times in 2022 and another 5 times in 2023!
• Are flexible. You can repay a variable rate loan early or refinance and your lender won't charge any fees.
• Usually have lower rates. Fixed rates are typically higher than variable rates (that's the price of certainty). But this isn't always the case.

Fixed rate mortgages...

• Won't change (for the fixed period). You can fix your rate for 1 to 5 years. And your repayments won't change during this time.
• Turn into variable rates anyway. Once the fixed period ends you're back on a variable rate.
• Are harder to break. Refinancing or repaying a fixed rate loan early comes with a break fee. This can cost thousands of dollars.

Most borrowers go for a variable rate

A variable rate loan is really about flexibility: paying the loan off faster via an offset account or extra repayments.

And it's about being able to exit the loan or refinance without paying a break fee.

Most Australian borrowers choose a variable rate. According to the AFG Index, just 2.3% of borrowers chose a fixed rate in the 3 months to end of June 2024.

Still unsure? Consider the split rate option

Australian borrowers don't have to pick between variable and fixed. Many lenders allow you to split your loan into fixed and variable portions.

"I'm team variable interest rate all the way. I don't fix my rate and I don't bother with a split rate either. For me, the value of a variable rate loan's flexibility and getting the full benefit of an offset account is so important. I can refinance whenever I need without penalty and if I decide to sell or make a big change that requires a new loan, it's so much easier."

Richard Whitten

Editor

The lowest variable rate vs the lowest fixed rate loan over time

This graph shows how the lowest variable rate loan has compared to the lowest fixed rate loan over the last few years.

Fixed vs variable rates: What are the differences?

Finding the best variable rate home loan for you

Every month, our home loan experts analyse more than 50 home loan rates from our database to find our best home loan picks. We only select home loans that are suitable for a typical borrower, so we don't include loans that require enormous deposits or have extra eligibility requirements.

We then rank these loans, with a scoring system that awards a higher score for loans with the lowest rates and fewest fees.

All our picks are from lenders with whom Finder has a commercial partnership. The best home loan looks a little different for every borrower and our picks may not be the best option for your situation.

Why you can trust Finder's research

100+ rates compared

Analysis from the experts

Picks updated monthly

2024 Finder Awards winners

Here are the variable rate home loans that won recognition at the 2024 Finder Home Loan Awards.

To determine the winner of Finder's Home Loan Provider of the Year award, we examine the home loans offered by lenders from across the market. That includes big and small banks, credit unions and online lenders. We examine the rates, fees and features of owner-occupier and investor loans to judge how competitive the loans are for each lender. And this year Easy Street won. All its loans offer competitive rates and low fees, putting it ahead of some lenders that won many individual home loan awards.

Tiimely's Live in 10% deposit Variable Rate - Principal & Interest with offset home loan won this year's Best Owner Occupier Variable Home Loan Finder Award with its consistently low interest rate, almost zero fees and an offset account. It has been one of the market's lowest variable rates all year, despite rising interest rates.

Tiimely's Live in 10% deposit Variable Rate - Principal & Interest with offset wins the coveted Best First Home Buyer Home Loan award for 2024. This loan is a clear winner because it combines one of the market's consistently lowest interest rates with very low fees and an optional 100% offset account. It's especially attractive for first home buyers because it's available with a 10% deposit.

Tiimely's Live in 10% deposit Variable Rate - Principal & Interest with offset takes out the top spot for the Owner Occupier Home Loan - Refinance Variable for the same reasons it has won several other awards in 2024: a low variable rate, low fees and 100% offset account. It's a loan that's just as useful for refinancers as it is for new borrowers.

Bendigo Bank's Live in Express Variable Home Loan - (Investor, P&I) offers a competitive variable interest rate for property investors, which is not something every lender offers. Fees are low and there's also an offset account, making this loan a useful option for investors who aren't making interest-only payments.

G&C Mutual Bank's Momentum Home Loan - LVR 60 to 80% Special Offer (Investor, IO) is Finder's 2024 winner for Best Investor IO Variable Home Loan category. This loan offers a low interest rate with minimal fees. While interest charges and fees are tax-deductible for investors, it still pays to get a more competitive loan.

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Why you can trust Finder's home loan experts

Easy answers, without any calls. We know fixing is a big deal, but checking you're options and rates shouldn't have to be. We speak to home owners every month, and have put over 50 hours in creating this guide.

Rates obsessed. We track big banks, small banks, credit unions and digital banks because whether you're fixing up for 1 year or 3, even 1 decimal place could save you big bucks (without getting annoying calls!).

Ready in any market .Lending rates verified from 180+ products day and night. Whether you're buying for the first time, or remembered refinacing at 3am - our rates are up-to-date.

Frequently asked questions about variable rate home loans

• What is the best variable home loan rate in Australia?

  Interest rates have changed a lot over the last couple of years and they could change over the next few months as well. While good interest rates are important, remember to look at what other features and fees come with the loan.

• Is a variable rate home loan better than a fixed rate home loan?

  Whether you choose a variable rate home loan or a fixed rate home loan is really dependent on your circumstances. Most borrowers prefer the flexibility of a variable rate loan.

  If you'd rather know exactly what you're paying each month so you can forget about rate changes, consider a fixed rate.

  Use our repayment calculator and speak to a mortgage broker if you want more information on what the right rate is for you.

• How do I know if variable rates are going to rise or fall?

  Lenders are free to move your variable interest rate up or down whenever they want. In practice, lenders move rates in response to wider market and economic conditions.

  While you can't really predict rate changes perfectly, it is possible to get a good sense of which direction rates are moving in.

  The Reserve Bank of Australia (RBA) sets the official cash rate each month. This is a benchmark for lenders to set interest rates on variable rate home loans.

  The RBA lowers interest rates to stimulate economic growth and encourage spending. When inflation is high, the RBA raises rates to cool spending and drive prices down.

• Which bank has the best variable rate?

  Credit unions and online lenders have the lowest variable rate home loans. And for most borrowers, lowest rate = best.

  But the big banks have really good apps and in-branch service. That can be a very big benefit.

• What types of variable rate home loans do lenders offer?

  Most lenders offer multiple variable rate home loans.

  • Basic variable home loans. A basic variable loan has a lower rate than a lender's other products (usually) and doesn't come with an offset account. These loans are all about the low rate.
  • Introductory discount home loans. These loans (sometimes called honeymoon home loans) are often the lowest variable rate loans a lender offers. But after the initial discounted period, the rate will revert to a higher rate. That's usually a good time to switch to a better loan.
  • Package home loans. These loans let you combine your mortgage with an offset account plus a credit card or other financial products. In exchange, you get discounted fees on the products and the convenience of having all your banking in one place. The downside? You pay an annual package fee of several hundred dollars.
  • Standard variable home loans. Standard variable rates are a bit of a throwback. These are the benchmark variable rates used for home loans with the Big Four banks and some other lenders. Most lenders discount the actual rate you get or will recommend a similar loan with a lower rate.

• When will mortgage rates go down in Australia?

  Interest rates rose rapidly in 2022 and into 2023. But now rates have stayed flat. It's hard to predict when rates may begin to fall again, but some economists think we could see rate cuts by the end of 2024.

• What is a good interest rate on a variable rate home loan?

  A "good" interest rate will really depend on the loan you need for your circumstances. Right now, a low 6% rate is competitive. The lowest rates are just below that. For example, the lowest variable interest rate on the Finder website at the moment is 5.69%.

His hilarious and deeply insightful book, Insufficient Funds, furthers his mission of empowering individuals through financial literacy with a relatable approach.

To make sure you get accurate and helpful information, this guide has been edited by Rebecca Pike and reviewed by James Millard, a member of Finder's Editorial Review Board.

Written by

Richard Whitten

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise

Richard has written 537 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips