Home LoanHow to Get the Best Variable Home Loan Rates

March 18, 2024

A variable interest rate loan is a loan which the interest rate being charged on the outstanding balance depends as market interest rates change. The interest being charged on a variable interest rate loan is connected to a very important factor which is the federal funds rate. Your payments will vary as a result.

Pros of Variable Rate Loans

  1. Mortgage repayments decrease when interest rates decrease.
  2. Mortgages typically have upfront perks like low introductory rates.
  3. The interest rate for a variable loan is normally lower than a fixed loan.

RBA as a Factor in Finding the Best Variable Home Loan Rates in Sydney

RBA or Reserve Bank of Australia is the country’s central bank. It manages the country’s monetary policy, handles gold and foreign exchange services and issues their currency. It is not a typical commercial bank. Its roles and responsibilities have variety of effects that impact home mortgages with its main goal to maintain Australia’s economic health.

The RBA sets the cash rate which is used as the standard rate for everything including mortgages, exchange rates, personal loans and more. The RBA conducts meetings to decide whether or not to increase, decrease or keep the cash rate as it is. Everything is affected from expenditures to investments to inflation when cash rate changes. Changes to the cash rate can be affected by a number of factors which are:

  1. Australian dollar performance
  2. Cost of living
  3. International economy
  4. Inflation
  5. Consumer confidence
  6. Unemployment levels
  7. Business confidence
  8. Real estate market performance
  9. Economic growth

Cash Rate’s Role on your Home Mortgage Rate

Home mortgage interest rate is likely to increase and decrease along with cash rate fluctuations. If the client is on a variable home mortgage interest rate and the interest increases, expect to start paying a higher monthly repayment as the monthly interest fee will increase. Vise versa. Variable home mortgage rates varies for a several reasons other than cash rate but if the client has variable home mortgage, it’s always best to check with your lender regularly.

Starting to Look for the Best Variable Home Loan Rates in Sydney?

  1. Remember that there are a lot of options out there so don’t always pick the first option. With multiple options available, be selective and don’t just stick to what the big four banks have to offer. Clients often find much more lower interest rates with an online bank or lender as they don’t have all the overhead costs that come with a physical branch.
  2. Research the current lending market in Australia to have knowledge about interest rates, mortgage types and lender options. Compare interest rates and mortgage features online through several financial websites. This knowledge will give you an idea to negotiate as you can leverage market information to seek better terms.
  3. Mortgage brokers are specialized in the home loans market and can definitely help in about mortgage products and interest rates. They can give personalized advice and assistance in finding the best variable home loan rates in Sydney depending on your financial standing. Mortgage brokers have connections with multiple lenders meaning they can negotiate on your behalf to ensure good rates and terms.

Types of Variable Rate Home Mortgage Loans

  1. Basic variable rate mortgage is a simple home mortgage that offers features in return for a lower interest rate as well as lower fees. If not annoyed about all the circles, then a basic home loan in Sydney can be a good choice.
  2. An introductory home mortgage or also known as a ‘honeymoon’ mortgage, offers a discounted interest rate for an specific period of time which is usually one to three years. Once the period ends, the rate changes to the ‘ongoing rate’. This type of variable rate home mortgage can be limited in features so it’s always best to check with each lender on what they can offer.
  3. Variable rate home mortgages are among the most common in Australia because of its flexible features such as redraw, offset facilities and the ability to make extra repayments.. However, the borrower generally pays a higher interest fees than of a basic variable rate loan.

Can I Switch from Fixed to Variable Rate Mortgage?

If you have a fixed rate home loan, you will be able to switch part or all your balance to a new variable rate loan most of the time. But this may incur break charges if you are making the change before the end of the fixed rate term. It is also possible to switch all or part of a variable home mortgage balance to a fixed rate if preferred. Break charges don’t apply when switching from variable to fixed although you may need to pay other fees.

Take a Leap with Australian Financial and Mortgage Solutions

In the world of financial services in Australia, Australian Financial and Mortgage Solutions or AFMS represents as a leader in credibility, expertise and in being customer focused. One of their core missions is providing personalized financial solutions to meet the different needs of clients around the country that’s why Australian Financial and Mortgage Solutions has been popular as a trusted partner for individuals and businesses.

AFMS also boasts on its wide range of services with a major focus on mortgage solutions. Whether clients are first-time homebuyers or seasoned investors looking to build their portfolios, AFMS offers personalized assistance and support in every step of the process. Through a team of amazing and well-experienced mortgage brokers and financial advisors, AFMS guarantees that clients receive expert advice for their unique financial standings and goals.

Australian Financial and Mortgage Solutions is always ready to assist. Contact AFMS today to get the best variable rate home loans in Sydney by scheduling a consultation with one of our experienced mortgage brokers. We will help you get into the financial world and build the way on buying your dream home. With Australian Financial and Mortgage Solutions by your side, rest assured that your financial goals are in capable hands.