STANDARD VARIABLE RATE HOME LOAN

A standard variable rate home loan provides borrowers with flexibility in terms of interest rates, which can vary with changes in the official cash rate set by the Reserve Bank or other economic factors. This means that borrowers’ monthly repayments may fluctuate over time, depending on whether interest rates rise or fall. The variability in interest rates allows borrowers to potentially benefit from lower repayments during periods of economic downturns or when interest rates are low.

This type of loan is popular due to its flexibility, as it often comes with additional features such as redraw facilities, offset accounts, and the ability to make extra repayments without penalties. Borrowers can take advantage of these features to manage their finances more effectively and potentially pay off their loan sooner.

However, the main drawback of a standard variable rate loan is the uncertainty it brings regarding future repayments. Fluctuating interest rates can lead to higher repayments if rates increase, impacting borrowers’ budgeting and financial stability. Borrowers who prefer a stable repayment schedule may find a fixed rate loan more suitable for their needs.

Overall, standard variable rate home loans are favored for their flexibility and potential cost savings during favorable economic conditions, offering borrowers the opportunity to adjust their loan structure according to their financial goals and current economic climate.

Benefits of STANDARD VARIABLE RATE HOME LOAN:

• Flexibility to benefit from potential interest rate decreases.
• Access to additional features like offset accounts and redraw facilities.
• Ability to make extra repayments without penalties, accelerating loan payoff.
• Options for adjusting loan structure to suit changing financial needs