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Standard Variable Rate Home Loans

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Standard Variable Rate Home Loans


What is a standard variable loan?
Otherwise known as floating rate loans, a standard variable loan is a loan where the amount of money paid by the borrower fluctuates depending on the changes within the interest rate market. Such a loan is usually used to: refinance, consolidate debt, work on home improvements or equity lines of credit. The standard variable loan is used to bolster up the purchase of a new vehicle or as an unsecured personal loan in case your credit is not considered good enough to guarantee such an option.

What's the difference?
The basic difference between a standard variable home loan and a fixed rate home loan is simple: The interest rates stay the same for your agreed term when you have a fixed rate home loan but in the case of a variable home loan, the interest rate fluctuates with the changing market rate. Due to changes in the market rate, the interest rate tends to change in a standard variable home loan.

Furthermore, variable home loan plans may have other differing features, e.g. they may have equity redraw facilities available so that you can take money out of your mortgage when you need it- providing you meet the terms of your loan.

Pros of a standard variable home loan:
In case the interest drops, the repayment also drops. In most cases, the additional payments allow the home loan to be paid off faster. Additional repayments can be taken back by the individual. The product and term are flexible and typically offer more features.

Cons of a standard variable home loan:
In case the interest rate rises, the repayments may also rise with the current market rate.

Final Tip
Like all variable loans, your repayments can change over the term of the loan and will usually be linked to the interest rate changes issued by the Reserve Bank of Australia, however this does depend on the banks actually passing the discount onto the customer and, as they have shown in recent history, they are not always prepared to pass on the discounts to their customers.

Get a free standard variable home loan quote

Contact Bad Credit Home Loans on 1300 724 342 or fill out the short contact form in the left hand menu to talk to a specialist and find out how to get a better deal on a standard variable home loan.