The benefits of securing a variable rate home loan
When it comes to taking out a home loan for purchasing property, half the battle is tailoring your loan towards the type of real estate you're hoping to buy. For example, if you're planning on buying an investment property, it could be worth considering taking out a variable rate home loan.
There are a number of benefits that property investors can gain from investing with a variable rate home loan, which can make the entire experience far easier and more streamlined in the long run.
The basic difference between a fixed rate and a variable rate home loan is that a variable rate is at the whim of the financial market, while a fixed loan has a steady interest rate locked in for a certain period of time.
With a variable rate, this means that the interest you pay on your home loan is likely to rise and fall multiple times during your repayment period. However, a variable rate home loan comes with a number of different benefits that a fixed rate may not.
For example, securing a variable rate home loan now while the official cash rate is at a historical low means that your current interest payments will be relatively small. If you have the means, this could give you the opportunity to make a huge dent into your home loan principal and help to get you mortgage-free faster.
Furthermore, there are a number of facilities that can be added to your variable home loan. One of the most valuable bonuses is the capability to make extra, lump sum repayments.
For example, if you come into a large sum of money, you can simply put that towards your home loan to help pay off your loan faster. This can be difficult to achieve when you have a fixed rate home loan.