Variable Rate Loan Features to Help You Save
As a pharmacy assistant working towards home ownership, understanding the features of variable rate home loans can make a significant difference to your financial position. Variable interest rate products offer flexibility and features that can help you build equity faster and potentially save thousands of dollars over the life of your loan.
What Makes Variable Rate Loans Different
A variable rate home loan has an interest rate that can move up or down based on market conditions and lender decisions. Unlike a fixed interest rate home loan where your repayments remain the same for a set period, variable home loan rates adjust according to changes in the lending environment. This means your repayments can fluctuate, but you gain access to valuable features that fixed rate products typically don't offer.
For pharmacy assistants looking to apply for a home loan, variable rate products provide opportunities to pay off your mortgage faster when your financial situation improves.
Key Features of Variable Rate Home Loans
Offset Account Benefits
One of the most valuable features of variable rate home loan packages is the offset account. A linked offset account is a transaction account connected to your home loan. The balance in your offset account reduces the loan amount on which you pay interest.
For example, if you have a $400,000 owner occupied home loan and $20,000 in your offset account, you only pay interest on $380,000. This can save you considerable money over time and help you build equity faster.
Making Extra Repayments
Variable rate loans typically allow unlimited additional repayments without penalty. This feature is particularly valuable for pharmacy assistants who might receive overtime pay, bonuses, or income from additional shifts. By making extra repayments, you can:
- Reduce your loan amount faster
- Pay less interest over the life of your loan
- Build equity more quickly
- Improve borrowing capacity for future property investments
- Achieve home ownership goals sooner
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Pharmacist Home Loans today.
Redraw Facilities
Most variable interest rate home loans include a redraw facility. This allows you to access any extra repayments you've made above the minimum required amount. If unexpected expenses arise, you can redraw these funds, providing financial flexibility while still maintaining the benefits of having reduced your loan balance.
Portable Loan Options
Many variable rate home loan products offer portability. A portable loan feature means you can transfer your existing home loan to a new property without having to refinance. This can save you money on application fees, valuation costs, and potentially avoid Lenders Mortgage Insurance (LMI) if your loan to value ratio (LVR) remains favourable.
This feature is particularly relevant for pharmacy assistants considering buying your next home as your career progresses.
Split Rate Flexibility
If you're concerned about interest rate movements but still want access to variable rate features, consider a split loan. A split rate home loan divides your loan amount between fixed and variable portions. You might fix 50% of your loan for security and keep 50% variable to access offset accounts and make extra repayments.
This approach provides:
- Protection against rising interest rates on your fixed portion
- Flexibility to make additional repayments on your variable portion
- Access to offset benefits on the variable component
- Balance between security and flexibility
Comparing Variable Home Loan Features
When you compare rates and home loan products, look beyond just the interest rate. Consider these features:
- Offset account availability: Does the loan include a full offset or partial offset?
- Additional repayment options: Are there limits or fees for extra repayments?
- Redraw facility: Is there a minimum redraw amount or associated fees?
- Loan portability: Can you transfer the loan to a new property?
- Rate discount opportunities: What interest rate discounts are available based on your loan amount or LVR?
Interest Rate Discounts and Negotiation
Variable rate home loan packages often include rate discount options based on factors such as:
- Your loan amount (larger loans may qualify for better rates)
- Your loan to value ratio (lower LVR can mean lower rates)
- Professional package eligibility for pharmacy sector workers
- Existing banking relationships
Many pharmacy assistants are surprised to learn they can access preferential home loan rates through specialist mortgage broking services that understand the pharmacy industry.
Principal and Interest vs Interest Only
Variable rate loans are available as both principal and interest repayments or interest only options. For most pharmacy assistants pursuing their first home loan, principal and interest repayments help you build equity steadily. However, interest only loans might suit specific investment strategies.
With principal and interest repayments on a variable rate loan, each payment reduces your loan balance while covering the interest charges. This approach helps you:
- Build equity consistently
- Own your home outright by the end of the loan term
- Improve your financial stability over time
- Potentially access equity for future property investments
Calculating Home Loan Repayments
Understanding how calculating home loan repayments works with variable rates is important. Your repayments will adjust when interest rates change. When rates decrease, you might consider maintaining your current repayment amount to pay off your loan faster. When rates increase, your lender will adjust your repayments accordingly to ensure you remain on schedule to repay your loan.
Working with a mortgage broker who specialises in the pharmacy sector can help you model different scenarios and understand how rate changes might affect your repayments.
Accessing Home Loan Options
Pharmacy assistants can access home loan options from banks and lenders across Australia. Different lenders offer varying features and current home loan rates. Some specialise in owner occupied home loans, while others have strong investment loan products.
Getting loan pre-approval with a variable rate product gives you certainty about your borrowing capacity while you search for properties. Home loan pre-approval demonstrates to vendors that you're a serious buyer and can help you secure your chosen property.
Working with Pharmacist Home Loans means you benefit from our relationships with multiple lenders and our understanding of how pharmacy sector income is assessed. We can help you access the lowest rates available for your circumstances while ensuring you get the home loan features that matter most to you.
Variable rate home loans offer flexibility and features that can significantly accelerate your journey to home ownership. By using offset accounts effectively, making additional repayments when possible, and choosing the right home loan package for your situation, you can invest in property with confidence and work towards your secure future.
Ready to explore your variable rate home loan options? Call one of our team or book an appointment at a time that works for you. We'll help you compare rates and find a home loan product with the features that support your property goals.
