The most popular choice of loan in Australia due to the flexibility and range of features which is generally in exchange for a slightly higher than a basic variable loan rate. Features such as low fees, offset facility, redraw facility and additional repayments – all of which can assist you in reducing the overall term and cost to your loan. The interest rate is not locked in as it moves up and down in line with the Reserve Bank of Australia’s interest rate fluctuations.

Advantages:

• Flexibility
• Lump-sum payments can be made without incurring a penalty.
• If interest rates fall, your repayments
• Often offer extra features.

Disadvantages:

• If interest rates rise your repayments will rise.
• Extra features mean you pay a higher interest rate than a basic variable rate.