Basic Variable Rate Home Loans

Welcome to our Basic Variable Rate Home Loans information page: This page is designed to assist you in understanding the basics of this type of loan, and to give you an understanding of some of the features and downsides.

About Our services:

  • Our brokers are experts in obtaining home loan approvals and specifically trained in loan structuring and credit policy, ensuring the best possible outcome for your needs.
    • We provide an Australia wide service, at no cost to you.The lenders pay us a commission for the introduction of your business.
    • Our website is designed to help borrowers understand the differences between loan types and the importance of having a mortgage broker to assist you in finding the right lender.
About Basic Variable Rate Home Loans:

What is a Basic Variable Rate Home Loan?

The basic variable-rate home loan is a no-frills type of loan. It is discounted to be cheaper than the standard variable-rate home loan, and because of this reduction in cost, you will also find that you will be limited on certain features, in comparison to other loans that are available.

The points below outline the basics of this type of loan.

  • Basic variable rate home loans are a cheaper version of a standard variable rate loan. As with the Standard Variable Rate home loan, the loan interest rate moves up and down with changes in the market in this type of loan also. This also means that your repayments will move up and down in line with those interest rate changes.
  • Some lenders will charge fees that may not be normally payable in other loans, such as a standard variable-rate loans. There are limited features with most lenders in a Basic Variable Rate Loan.

Basic variable rate home loans certainly have a place, for certain clients.

Approval and suitability will depend on your required loan amount, the facilities and options that you want your loan to have, options needed in your loan product and your individual circumstances.

All aspects of your lending needs will need to be assessed, in order to know if this loan is going to be suitable for you.

Should You Choose a Basic Variable Rate Home Loan?

If you require a loan that has minimal fees and you do not need all of the normal features that come in a standard variable rate home loan, then this loan may be a suitable option for you.

The information that we analyse allow you to know three things:

  • Is this product is the most suitable for your situation?
  • Which lender is going to provide the most competitive deal for you based on the information you have provided and does this loan provide your required features?
  • Are you able to qualify for this loan, based on your income, your deposit or equity, and your credit history?

Because we have access to a whole panel of lenders that have this type of loan, a chat with your loan advisor will enable you to be more informed.

What benefits are there for you in a variable-rate home loan?

There are some benefits attached to this type of loan, provided that it is the correct loan for your situation.

  • The benefits of a basic variable-rate loan are that you generally have no package fees, and that you have a reasonably competitive variable interest rate.
  • Most basic variable-rate loans allow you to repay extra on to your home loan in order to pay the debt down faster, therefore saving you money over time.
  • Available in loan terms up to 30 years in most cases.
  • Suitable for people who are happy to just have a loan where they are paying the minimum amount and have absolutely no intention of redrawing or offsetting any extra funds against the mortgage in the future.

What do you need to be careful of with variable-rate home loans?

  • Interest rates can move up unexpectedly which will force you to pay a higher amount on your repayments. Depending on the lender and also on the reserve bank of Australia rates will change over time. They may go down or up and this will definitely affect how much you will be required to pay. There are other options out there that will allow you to have the best of both worlds. This is covered on our structured split loan facility.
  • Features on  basic variable rate home loans are limited and you may want to consider if this type of loan would be right for you. Options such as not being able to redraw extra funds may not suit you in the future.
    • The most common feature that you are not allowed to have with a basic variable-rate loan, is a 100% offset account. If you have the ability to save money over and above your living expenses and your loan repayments, then an offset account may be something that you would want. If you have a basic variable-rate loan, then an offset account in most cases is just not going to be available to you. There are also other limitations to this type of loan.
      • You may be entitled to have a discount on a different loan that would be cheaper than a basic variable-rate loan. If you apply for a basic variable rate home loan, please remember that you will more than likely be locked into this loan without the opportunity to add necessary features or being able to apply a package to this loan, if you change your mind.
      • We highly recommend that you have your finance broker assess whether a package loan would be more applicable for your circumstances – before applying for this type of loan.

How can I apply?

These are your simple steps to apply for a loan.
  • Contact us on the numbers above to speak to a mortgage broker, or complete our online enquiry form.
  • You will speak with a broker who will take into account your needsby discussing not only your requirements, but also any concerns you have, and offer you some possible strategies and ideas that you may not have thought about.
  • Once we know what you require, we will draft and email you a proposal– this will usually consist of a few options that are easy to understand.
  • Once you have had a chance to look at what options are available, you can contact your broker or the broker will call you, to discuss the proposal.
  • You can then decide if you wish to proceed or you may just want to discuss more options.

What are my other options?

There are many options available:
  • Whether you are after a variable interest rate, a fixed interest rate, interest only loan, equity loan or any of the other loans available, it is important that you find out what is available to you before applying for a loan.
  • The loans listed below are available for most lending purposes. Whether you are refinancing your home loan to a lower rate, or a property investor looking to buy that second or third property, we will have some ideas for you to consider.
  • Even if you are a first home buyer purchasing a new home or renovating your existing home, there are some great deals available from the banks and lenders that we are accredited with.
  • Please click on a link below to learn more about other loans that are available to you.
Summary:

NOTE: These pages are of general advice in nature. They have not taken into account your specific needs and objectives and are therefore designed to provide general information only. Before acting on any of the information contained on our website please have your Mortgage Broker assist you in determining the right product for your individual needs.

Posted 20 February 2015
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Specializing in Residential and investment lending.

Mortgage finance brokers located in the Wollongong, Corrimal, and Kiama and Shellharbour areas.

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