Variable rate home loans
Variable Rate Home Loans
A variable rate home loan has an interest rate that can rise or fall over the life of the loan, usually after changes to the RBA cash rate or lender funding costs.
Variable loans typically allow unlimited extra repayments, redraw and an offset account, giving you more flexibility than a fixed loan.
Book a complimentary strategy sessionHow a variable rate works
Your rate moves with the official cash rate, market conditions and each lender's own decisions. When rates go down, so do your minimum repayments. When rates go up, your repayments rise too.
Pros of a variable rate
- Repayment flexibility: you can usually pay off your loan faster without break costs.
- Offset and redraw: features that reduce the balance you pay interest on while keeping your savings accessible.
- Easier to refinance: you can switch lenders or products without break costs.
- You benefit if rates fall: lower rates mean lower repayments.
Cons of a variable rate
- You pay more if rates rise: lenders can change a variable rate at any time.
- Less certainty: it's harder to predict your repayments over the long term. An offset or redraw buffer can help smooth out cash flow.
Making the most of a variable loan
Paying extra when you can and keeping your savings in an offset account both reduce the interest you pay. Try the offset calculator, compare fixed rate home loans and split home loans, or read our five mortgage checks before the next RBA decision.
Frequently asked questions
Can I make extra repayments on a variable loan?
How quickly do lenders pass on RBA rate changes?
Does a variable loan come with an offset account?
Is your variable rate still competitive?
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