Variable rate home loans remain a popular choice among Tasmanian Government Employees, offering flexibility and potential savings when interest rates move in your favour. Understanding the key terms and features of variable rate loans can help you make informed decisions when applying for a home loan.
What Are Variable Rate Home Loans?
A variable home loan rate means your interest rate can move up or down during the life of your loan. Unlike a fixed interest rate home loan where the rate stays the same for a set period, variable rates fluctuate based on market conditions and lender decisions.
When you access Home Loan options from banks and lenders across Australia, you'll find that most variable rate products offer:
• Flexibility to make extra repayments without penalties
• Access to features like offset accounts
• Potential for interest rate discounts
• The ability to switch between variable and fixed portions
Key Terms You Should Understand
Loan to Value Ratio (LVR) determines how much you can borrow against the property value. A lower LVR often means better interest rates and may help you avoid lenders mortgage insurance (LMI). For Tasmanian Government Employees, some lenders offer LMI waivers which can save thousands on your loan amount.
Borrowing capacity refers to how much you can borrow based on your financial situation, including income, expenses, and existing debts. Our team can help assess your borrowing capacity to understand your position before you start house hunting.
Offset accounts are transaction accounts linked to your home loan. The balance in your offset account reduces the amount of interest you pay on your home loan, potentially saving you thousands over the loan term.
Interest Rate Features and Discounts
Variable rate loans often come with interest rate discounts for certain professions. As a Tasmanian Government Employee, you may qualify for preferential rates through our specialised home loan products. These discounts can significantly impact your monthly repayments and total interest paid over the loan term.
When calculating home loan repayments, remember that variable rates mean your payments can change. Some borrowers prefer to budget based on slightly higher rates to account for potential increases.
Ready to get started?
Book a chat with a Finance and Mortgage Brokers at Public Home Loans today.
The Application Process for Variable Rate Loans
The Home Loan application process for variable rate loans involves several steps:
- Get pre-approved - This gives you a clear picture of your budget when buying a home
- Gather documentation - Including banks statements, payslips, and proof of employment
- Property selection - Consider factors like stamp duty and ongoing costs
- Final approval - Once you've found your property
Our streamlined application process is designed specifically for public sector employees, understanding your employment structure and benefits.
Comparing Variable vs Fixed Rates
While this article focuses on variable rates, it's worth understanding how they compare to fixed interest rate home loans:
Variable Rate Benefits:
• Rate decreases benefit you immediately
• More loan features available
• Usually lower establishment fees
• Flexibility for extra repayments
Variable Rate Considerations:
• Rates can increase, affecting your budget
• Less certainty for long-term planning
• Requires monitoring of property market conditions
Making the Most of Your Variable Rate Loan
To maximise the benefits of your variable home loan rates:
• Use an offset account to reduce interest charges
• Make extra repayments when rates are low
• Regularly review your loan terms and rates
• Consider a loan health check annually
Many Tasmanian Government Employees find that building home equity through extra repayments during low-rate periods provides financial security and flexibility for future property decisions.
Working with Mortgage Specialists
Choosing the right variable rate home loan involves comparing multiple Home Loan options and understanding how different features align with your financial goals. Our expertise in home loans for public servants means we understand the unique benefits and challenges facing government employees.
We can help you understand complex terms, compare rates across multiple lenders, and structure your loan to take advantage of variable rate benefits while protecting against potential rate increases.
Variable rate home loans offer flexibility and potential savings, but they require careful consideration of your financial situation and risk tolerance. With proper understanding and professional guidance, a variable rate loan can be an effective tool for achieving your homeownership goals.
Call one of our team or book an appointment at a time that works for you to discuss how variable rate home loan terms could work for your situation.
