A variable rate loan is a loan where the interest rate can fluctuate throughout the loan term based on changes in the market, primarily the Reserve Bank of Australia’s official cash rate – or at the lender’s discretion. This means that the amount of interest you pay can change over time, and as a result, your monthly repayments can also vary.
While variable rate loans offer significant flexibility and potential savings, it’s important to remember that your repayments can increase if interest rates rise. This means you’ll need to budget with some buffer to accommodate potential rate increases. However, for many borrowers, the flexibility and features of a variable rate loan make it the preferred choice for long-term home ownership.
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