Standard Variable Rate Home Loan

Understanding Your Home Loan

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A standard variable home loan attracts what is known as a variable interest rate. A variable interest rate can vary during your contract and may increase or decrease.

The Variable interest rate is governed by the Reserve Bank of Australia (RBA). The RBA set the interest rate depending on the current economy market, so if inflation is stable and the economy is slowing the interest rate is more likely to fall. If the economy is booming and inflation is likely to climb then interest rates may rise. The RBA makes these decisions in an attempt to keep the economy stable. There is no better way to stop you spending too much money than reducing the amount you have in your pocket to spend.

So the economy is stable your interest rate will remain the same but if we are all spending too much money interest rates will increase, and so will your variable home loan repayments.

The benefit of a Variable Rate Home Loan is that it allows you the flexibility to make unrestricted additional repayments (including lump sum payments) off your home loan.

Most Lenders offering standard variable home Loans allow you access to withdraw the surplus funds, and offset your credit savings against the interest raised to your home loan.