BASIC VARIABLE RATE LOAN ADVICE FOR AUSTRALIAN BORROWERS
Information, money saving tips and commentary on Basic Variable Rate Home Loans in Australia

Basic Variable Rate Home Loan



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What is a Variable Rate Home Loan?

With variable rate home loans the interest rate varies according to market forces but is normally several percentage points higher than the current Reserve Bank interest rate. When the Reserve Bank changes official rates then variable rates from bank and non-bank lenders follow suit. Interest Rates can move up or down.

The Variable rate home loan is still the most common form of loan in Australia and is normally a principal and interest type loan, but can be interest only. Equity, Renovation, Low Doc, No Deposit, Debt Consolidation, Investment and First Home Loans are just other names for Variable Rate Loans. However as many of the loan titles suggest, the eligibility criteria is different for each.

Standard Variable loans include features that give the borrower maximum flexibility in management and repayments.

Basic variable loans are usually the cheapest loan on the market in terms of interest rates. However this doesn't always mean they are the cheapest loan as there may be extra charges like monthly account fees, and they often don't have many of the useful features of the standard loan (see below).

Variable Rate Loans are still the largest part of the mortgage market as they have been for many years because they are flexible and feature rich.


VARIABLE RATE INVESTMENT PROPERTY
Std Variable Rate Loan
Basic Variable Rate Loan
Fixed Interest Loan
Split Loan
Home Equity Loan
Debt Consolidation Loan
Low Doc Loan
Non-conforming Loan
Line of Credit
Interest Only Loan
Reverse Mortgage
Construction Loan
Renovation Loan
Refinancing
Home Loan Resources
Mortgage Broker
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Basic Variable Rate Loans

Features of Basic Variable Rate Loans

Standard Variable rate loans offer flexibility, low fees and moderate interest rates. With a Basic Variable Rate Loan you generally trade flexibility and low fees for a slightly lower interest rate.

If there is a reduction in official interest rates, your repayments also reduce.

Other useful features can include a redraw facility, direct salary crediting, portability and repayment options. Most Basic Variable Loans do not include offset accounts or a split loan facility. Account keeping fees are usually higher than Standard Variable Loans and so are Redraw fees.

Benefits of Basic Variable Rate Loans

  • The redraw facility means you have easy access to extra funds if required (at a cost).
  • The Interest Rate is usually the lowest of all types of home loans
  • If you want to sell your existing house and buy another one you can often take the loan with you saving on loan fees.
  • It is easy to vary the repayment periods to suit your paydays etc.(weekly, fortnightly, monthly)

Tips and strategies

  • Try to find loans with low monthly account fees
  • When interest rates drop retain current repayment levels
  • Have your wages paid into your loan account to reduce interest
  • Put lump sum payments like tax refunds into your loan account (if permitted). If required later, use the redraw facility.

Example Rates and Fees

Basic Variable Rate Home Loan NO FEES (July 2016):
  • Monthly fee NIL
  • Annual fee NIL
  • Redraw fee NIL
  • Extra Payment fee NIL
  • Fixing fee NIL
Low Rate 5.00% variable
CCR 5.08%*
*Based on $250,000 Loan over 25 years.

You can apply over the Internet just ask a Lending Professional for a free no-obligation quote on a Basic Variable Rate Loan.






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