Why Choose a Variable Rate Home Loan?

Key Benefits for Australian Borrowers

When it comes to home loans in Australia, the choice often boils down to fixed or variable interest rates. If you’re curious about how a variable rate home loan might benefit you, let’s break it down into digestible points.

What is a Variable Rate Home Loan?

A variable rate home loan has an interest rate that fluctuates with market conditions. This means your mortgage payments may increase or decrease based on the lender's variable interest rate. In contrast, a fixed-rate loan locks in your interest rate for a specific term, usually between one to five years.

Why Choose a Variable Rate?

• Flexibility: Want the freedom to make extra repayments or utilize an offset sub-account? A variable rate home loan offers these options, allowing you to potentially pay off your mortgage faster and save on interest.
• Potential for Lower Payments: When interest rates drop, your monthly repayments can also decrease, putting more money back in your pocket.
• No Break Fees: Unlike fixed loans, which can hit you with break fees if you refinance early, variable loans usually don’t have these penalties.

How Do Interest Rates Change?

Interest rates on variable loans can change due to several factors:

• The Cash Rate: Set by the Reserve Bank of Australia (RBA), the cash rate influences the interest rates across the board. When the RBA adjusts the cash rate, lenders may follow suit.
• Market Conditions: Economic factors and lenders' funding costs can also impact the rates you’re offered.

Key Differences Between Fixed and Variable Rates

• Rate Stability vs. Flexibility: Fixed rates provide peace of mind with consistent payments, while variable rates offer the flexibility to capitalize on market changes.
• Features and Options: Variable loans often include features like offset accounts and redraw facilities, which can significantly enhance your financial strategy.

Is a Variable Rate Right for You?

It all depends on your financial goals. If you prefer budget certainty, a fixed rate might be appealing. But if you value flexibility and the potential for savings, a variable rate could be a great fit.

Ready to Explore Your Options?

At ASK Financial, we understand that choosing the right mortgage is crucial for your financial future. Our team of expert brokers is here to help you navigate your options, whether you're considering a variable rate for its flexibility or a fixed rate for its stability.

Don’t let uncertainty hold you back! Schedule a free discovery call with us today to get personalized advice tailored to your needs. For more information click the link.?

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