Save on interest with an offset account

The vast majority of lenders offer an offset account on their variable rate home loans. An offset account allows you to reduce the interest paid on your home loan each month.

Flexibility to make extra repayments

Variable rate home loans typically have no restrictions on making additional repayments. If you’re looking to pay extra off your home loan, a variable rate home loan may be right for you!

Redraw additional loan repayments

If you have made extra repayments, most variable rate home loans will allow to access these funds if you wish to. This functionality is called ‘redraw’ and can be used in place of offset in certain circumstances.

No additional fees or charges if you pay out the loan

Unlike fixed rate home loans, which may have a fixed rate break cost payable if you close the loan, there are generally no additional fees for paying out a variable rate home loan. However, any home loan pay out will usually include fees from the lender for processing the discharge.

Can be combined with a fixed rate home loan

Your loan doesn’t need to be 100% fixed or variable. A mix of both may be more appropriate for your needs and give you the best of both worlds- flexibility with a variable portion and certainty of repayments with a fixed rate portion.

The main limitation of a variable rate home loan is that your interest rate can change during the loan term. This can be as a result of RBA changes or lender changes. If you would prefer certainty with your interest rate, consider a fixed rate home loan or a a split home loan.


If your interest rate is changed, the required monthly repayments on your home loan can also increase (or decrease, of course). This can make budgeting more difficult with a variable rate home loan.

Navigating your options and knowing what to consider when structuring your home loan comes from experience. As your mortgage broker, we will walk you through your available lender and interest rate options along with the pros and cons of each.

Things to consider when looking at variable rate home loans include:

  • Are you concerned about interest rate movements?
  • Are you comfortable with your home loan interest rate changing (both up or down)?
  • Do you intend to make extra repayments on your home loan?
  • Does the lender offer an offset account with their variable rate home loan?
  • Is there an additional cost for offset and is it worth the cost?
  • What fixed and variable interest rate options are offered by your chosen lender?
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Details of your Financial Position

You will need to have details ready of your existing assets, liabilities and expenses, as well as basic information like employment and address history. This information can be provided in our secure client portal

Income Documents

This will include payslips if you are in a salaried or PAYG role and tax returns, notices of assessment and financial statements if you are self-employed

Good Credit History

The bank will review your credit file and check your credit enquiries as well as existing account conduct and repayment history. Having a clean credit file is essential when applying for a home loan. If you have concerns about your credit history, please let us know and we can review your file before any application is lodged

Deposit or Equity

All variable rate home loan applications have a requirement for either a sufficient deposit (if you are purchasing) or sufficient equity in your property (if you are refinancing). We will work this out for you if you aren’t sure you have a sufficient deposit or equity.

As your mortgage broker, Simplifi Lending will review your lender options across more than 40 top home loan lenders. We will also:

  • Calculate an accurate borrowing capacity for you
  • Provide a free, detailed preliminary assessment that show rates, fees, repayments and total cost for your lender options
  • Ensure you meet lender credit criteria before any application is lodged
  • Discuss your interest rate and home loan structuring options
  • Prepare and lodge your home loan application on your behalf
  • Manage your application from submission right through to settlement

See our Home Loan Application Process page for full details and more information.


Once your loan is settled, Simplifi Lending are your ongoing point of contact. We are here to assist with anything to do with your home loan (no more sitting on hold to the banks!). We can assist with:

  • Interest rate reviews
  • Refinances, top ups, loan type changes
  • Future plans (moving house, investment properties etc.)
  • Debt consolidation
  • Fixed and interest only expiries
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What causes interest rates to change?

Interest rate changes are often caused by changes in the official cash rate from the Reserve Bank of Australia (RBA). However, lenders can also change their rates for other reasons including:

  • Changes in the cost of their funding
  • To compete with offers available from other lenders
  • To manage their interest rate margins
  • To favour or limit applications from certain types of borrowers- for example, pricing is often sharper for lower loan-to-value ratio (LVR) applications or for applications with a higher loan balance

If your current lender increases their rates out of step with the RBA, it may be worth reviewing the other options in the market to see if there are more competitive offers.

Can you switch from a variable rate to a fixed rate home loan?

Yes, generally a switch from a variable rate home loan to a fixed rate is fine with most lenders. Going the other way (from a fixed interest rate to a variable home loan) is usually not such a simple switch and may incur additional fees to break the fixed rate.

Are variable home loan rates negotiable?

If you are on a variable interest rate with your current lender that is not competitive, you can ask them to review this rate and they may offer you a better interest rate to retain your business. If this rate is still not competitive, then you have the ability to look at refinancing your home loan.

It is also very common for lenders to offer ‘carded’ or advertised interest rates that are substantially higher than what is actually available from that lender by negotiation. As your mortgage broker, we will negotiate for the best possible interest rate with your chosen lender when we are preparing your application.

What is the difference between principal & interest and interest-only home loans?

These are the two main repayment types on offer with most lenders. Principal and interest (P&I) repayments are where a portion of the original amount borrowed (the principal) is paid off with each home loan repayment. Interest only repayments are where only the interest charged is paid to the lender each month, with no principal being repaid. Principal and interest rates are typically lower than interest only rates.

What type of home loan you are applying for and whether or not your property is an investment can impact which of these may be appropriate for you.

What is an introductory variable interest rate?

An introductory interest rate (also called a ‘honeymoon’ interest rate) is an offering from a lender where the interest rate is lower for an initial period (often 1-3 years) and then reverts to a substantially higher rate after this period.

These may be the right offer for you under certain circumstances, but our usual suggestion is to avoid these if there is a comparable rate that doesn’t elapse after a certain amount of time.

What is a split home loan?

A split home loan is where a home loan is structured partly with a variable interest rate and partly with a fixed interest rate. This doesn’t have to be a 50/50 split and can be almost any combination (i.e. 90/10, 70/30 etc.). The main benefit to a split home loan is you get access to offset and repayment flexibility with the variable interest rate portion, and interest rate and repayment certainty with the fixed interest rate portion.

Are variable rate home loans or fixed rate home loans better?

The answer to this really depends on your personal circumstances including:

  • Your household budget
  • Variance in your income (seasonal or lump sums)
  • Your risk tolerance
  • Your level of concern around interest rate and repayment increases

We will discuss the above in further detail as part of your free Preliminary Assessment.