Why a Variable Interest Rate for Your Home Loan Could Be Right for You

When it comes to choosing the best home loan for your needs, one of the main factors you’ll need to consider is the interest rate. Ultimately, the interest rate is one of the main elements that determines how much your mortgage repayments will be.

As the name suggests, variable interest rates vary and fluctuate throughout the term of your loan. There are a number of different factors that impact your interest rate, including:

• The official cash rate set by the Reserve Bank of Australia’s (RBA)
• A lender’s cost in funding changes
• The loan purpose (owner-occupied or investment)
• Interest rate type (Unloan currently offers variable rates only)
• Loan repayment type (we currently offer a principal and interest loan only)
• The principal or outstanding amount

You can learn more about how interest rate changes affect your loan repayments here.

Variable home loans often offer greater flexibility. Many variable home loans provide access to additional features, like redraw facilities, offset accounts and the ability to make additional repayments towards your home loan. Please note we currently do not offer offset accounts at Unloan, but a linked-CommBank offset account is coming soon.

If you play your cards right, you might be able to pay off your home loan quicker with a variable interest rate if interest rates drop. However, it’s important to note that if rates increase, your loan repayments will increase with them which can make it difficult to stay within a budget.

When it comes to picking the best type of interest rate or home loan, there’s no right or wrong answer. Everyone’s circumstances and needs are different, so it’s important to find a rate that works best for you. Learn five factors worth considering when trying to decide which rate is best for you.

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍