Standard Variable Rate Home Loan


Information, money saving tips and commentary on Standard Variable Rate Home Loans in Australia
Standard Variable Rate Home Loan 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 other lenders follow suit. Interest Rates can move up or down. The Variable rate home loan is 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 flexibility in management and repayments - see below. 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. Standard Variable Rate Loans are still a major part of the mortgage market as they have been for many years because of their flexibility and features.
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Standard Variable Rate Loans

Features of Standard Variable Rate Loans

Probably the main advantage of variable rate loans is that there is no penalty in paying the loan off quicker by making additional payments.

Less important now that interest rates are rising again is that if there is a reduction in official interest rates, your repayments also reduce.

Other useful features can include offset accounts, a split loan facility, redraw facility, direct salary crediting, portability and repayment options.

Benefits of Standard Variable Rate Loans

The redraw facilty means you have easy access to extra funds if required.
Increasing your repayments above the agreed amount can shorten the term of the loan and save thousands of dollars in interest.
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). Use our Loan Payment Calculator to compare payments.

Tips and strategies

Avoid loans with monthly account fees
Making weekly or fortnightly repayments pays your loan off faster than monthly payments because you are making 1 or 2 extra repayments per year
When interest rates drop retain current repayment levels
Have your wages paid into your loan account to reduce interest and use the interest free period on a credit card for purchases before paying the credit card bill from the loan account
Put lump sum payments like tax refunds into your loan account. If required later, use the redraw facility.

Example Rates and Fees

Variable Rate Home Loan NO FEES (July 2008):

Monthly fee NIL
Annual fee NIL
Redraw fee NIL
Extra Payment fee NIL
Fixing fee NIL

Low Rate 7.97% std. variable
CCR 8.08%*
*Based on $200,000 Loan over 25 years.

You can apply over the Internet and ask the Home Loan Club for a free no-obligation quote on a Standard Variable Rate Loan.

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