Variable rates explained

Which is better: fixed or variable?

A variable rate home loan is one where the interest rate will vary based on the market. If the Reserve Bank of Australia (RBA) puts the cash rate up, your interest rate will most likely rise too. If the cash rate goes down, so will your interest rate. Lenders offer it as an alternative to fixed-rate loans. If you go for a fixed-rate loan, the interest rate will remain the same for a set time, usually one, three or five years. Some experts point out that variable home loan rates are better in the long run. If the interest rate goes up, your interest will go up, too and so will your repayments. However, if it goes down, the interest rate will decrease and your repayments will also decrease. In this second case, you’ll end up paying less in the short term. There’s another thing to consider when choosing what type of rate to go for. When you take out a fixed-rate loan, the interest rate you get reflects the state of the market at that time. If the interest rates are on the rise when you get a loan, you’ll end up saving more than you would at a variable rate. Find a deal

The benefits of variable rate home loans

When interest rates are declining, your repayments will be lower. Variable rates can prove to be a good choice in this uncertain economic climate. With variable rate home loans, banks often offer extra features, too, such as:

• Unlimited redraws

on repayments made early. This allows you to withdraw any money you have deposited in advance from your account.

• An offset account.

The banks subtract the offset account balance from the mortgage account balance. This difference is the net balance for which they charge interest. As a result, your repayments will be lower. • The option to make extra repayments at no extra cost. This allows you to repay your loan faster if you have the means. If you do this, you will also save on interest.

• Charging less to change loans.

When you have a variable rate loan, changing to a different loan is easier. If you find a better loan somewhere else, it will cost you less to get out of your current deal.

The downsides of variable rate home loans

It’s the uncertainty of the market that makes taking out variable rate loans risky. If there’s a sudden increase in the rates, you will have to pay more to meet the terms and conditions of the loan. The negative aspects of these loans reflect onto your budget. First, it’s impossible to plan your spending in advance. Loan interest rates will often change, as will the value of your repayments. When you applied for a home loan, you planned according to your budget at the time. With rates on the rise, your payments will have to be larger. If your budget is still the same as it was then, you may even fall behind on your repayment schedule. How much can I borrow?Use UNO's calculator to estimate your borrowing capacity. Calculate Now

Calculating home loan repayments

With variable rate home loans, it’s difficult to determine how much the loan will cost you in the end. UNO’s home loan repayment calculator works on all loan types, including those with variable rates. You can enter the amount of your loan, its purpose, and its term. The calculator shows you how high your repayment instalments will be. You can also use it to compare different loans to find out which one gives you the best deal on the whole. Find a dealBook in a quick call with our customer care teamIt’s important to note that the information we give here is general in nature – no matter how helpful or relatable you find our articles. Even if it seems like we’re writing about you, it’s not personal or financial advice. That’s why you should always ask a professional before making any life-changing decisions.Book a call in with UNO

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Sally Mackenzie
February 19, 2024
We chose Uno Home Loans from their impressive web site knowing we were going to find it hard, on many fronts, to qualify for a home loan. We were incredibly fortunate to be assigned Mike Parsons as right from the get-go, despite the complexities, he hit the ground running for us. He was incredibly knowledgeable, with years of experience but what was immediately apparent and impressive was that he was totally invested in getting us over the line, doing absolutely everything possible, including working around the clock. Despite it being a relatively small loan in the order of things, Mike never missed a beat, getting docs ready, following up and answering every request from the proposed funder immediately. He kept us informed on progress the minute anything happened, and again if anything needed to be done, he was right on it. In short, we highly recommend Uno, and Mike, knowing what a remarkable job he did, over many weeks, to get us our loan. He got us a great deal, with far better rates than we expected, so we couldn't be happier. In fact, without doubt, you'd be hard pressed to find a more personable, sharp, hard working, dedicated professional who clearly prides himself on getting his customers standout results.
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February 13, 2024
Scott and his team were just A-mazing. We felt supported through the whole process with the greatest quality and care. Every question answered right in time, or even before we asked. The process was smooth and we got the best outcomes we could have wished for.
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Angela Biddle
February 6, 2024
Our mortgage recently came up for renewal, and with interest rates skyrocketing we were looking for ways to minimise the impact. Michael and his team were proactive and attentive. Michael spent time with us to understand our circumstances. He found mortgage options that worked with our current financial situation and longer investment plans. He presented clear options, providing guidance where needed. He and his team were helpful and responsive - streamlining the process and keeping us updated through the negotiations. In the end, Uno did the heavy lifting and secured a significantly better rate than our current bank offered, all with friendly, personal service. We would highly recommend UNO Home Loans.
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Fotis Bikas
January 15, 2024
I cannot help but congratulate Scott Wilkinson of UNO Home Loans for being an absolute credit to both his company and the entire loans industry. Scott is a truly rare gem of a broker in that he will not only go the extra mile to achieve for each customer the very best deal, but his knowledge of all and sundry within the industry is unsurpassed (you will see what I mean if you speak to him). Additionally, Scott has a clear passion for imparting his wealth of information with each customer, whereas the conversation with most other brokers would simply be over if they could not get you the best deal. For me, Scott Wilkinson of UNO Home Loans stands head and shoulders above the competition and I feel privileged to benefit both from his expertise and professionalism whenever it is time for a refinance or new loan.
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Tomoharu Matsui
January 11, 2024
Michael Parsons helped me a lot when it's difficult to establish my capabilities in loan.
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January 9, 2024
I highly recommend Mike Parsons as a mortgage broker. I couldn't fault the service provided by UNO. Thanks Mike!
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Taner T
December 20, 2023
Thank you Eren Tan for the amazing service and support. Our Loan was a little tricky and complex for other lenders but Eren managed to get it over the line in record time. His professionalism and dedication to our needs was exceptional. If you need a Loan no matter how complex your situation, make sure you contact Eren at UNO Home Loans.
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December 20, 2023
Buying & selling a house at the same time is very stressful but Scott Wilkinson from UNO home loans made sure we knew what was happening & took most of the stress away. He always kept us up to date and if we had a concern or wanted clarification on something we were able to call him, if he didn’t know the answer straight away he will find out and contact us back.. now we are enjoying our new house and turning it into a home :)
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December 18, 2023
Just completed my first loan with UNO which was so much easier than with other other brokers I have used in the past. Our broker MIKE PARSONS always had time for me and broke things down for me in the simplest of terms and was very patient with my silly questions and my constant changing of plans. I wish I had used them in the past as I wouldn't be in the situation I'm in now. Can't recommend them highly enough. Thanks UNO and Thanks MIKE 😊
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December 11, 2023
To be able to recommend Scott Wilkinson for your mortgage broker was a privilege. We had deals fall through but Scott supported, guided and stuck with us, proper partnership. The whole team at UNO helped us and supported us right through to after settlement. Made sure everything was correct and how we are progressing. Communication was amazing and straightforward and easy to understand. Transparent. We can not Recommend Scott and the team as Uno high enough. Use UNO with confidence.
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December 6, 2023
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November 3, 2023
If you’re looking for a trustworthy, thorough, reliable & knowledgeable Mortgage Broker then you must call Anita Callaghan! I can’t even imagine how stressful this process would’ve been without her. Anita went above and beyond to make sure she answered every question, responded to every text (even on weekends/after hours), and followed up on every detail to ensure we had all the info we needed. Anita is a true people person who is warm, empathetic, kind and supportive. You can tell she loves helping people and loves what she does, which is probably why she’s so good at it! Can’t thank you enough Anita, or recommend you more highly! You’re the best!
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