What is a variable loan?
What is a variable or variable-interest rate loan?
These loans are the most common type available for mortgages or real estate purchases. The variable rate refers to the interest rate applied to repayments, which is not locked in at a set rate, but varies with the lender’s interest rate charged over time.
A variable interest rate loan offers more features and flexibility than the basic or ‘no frills’ loan, so the rate is usually slightly higher.
The extra options (for example a redraw facility, the option to split between fixed and variable, extra repayments and portability) should be taken into account when choosing your type of variable rate loan.
Repayments will vary as interest rates fluctuate.
Lenders may offer:
- fixed and variable rate loans
- flexibility to swap between both types inside of your loan
- flexibility to secure a portion of your loan at a fixed and a portion on variable rates
We recommend that you should be familiar with both types of loan. More on fixed rate loans here, or fast track your financial goals and get in touch today.