Whether it's a first home buyer loan or an investor mortgage, one of the first decisions you'll need to make is whether to opt for a fixed or variable interest rate.

Common thought is that fixed-rate home loans are the safer choice, and this is certainly true in many situations.

However, there are times when a variable-rate home loan simply makes more sense.

When should I choose a variable rate?

In most cases, how long you plan to stay in your home should act as the deciding factor.

For instance, if you plan on buying a home and then upgrading within a couple years, a variable-rate mortgage might be the best fit for you.

Variable-rate mortgages typically have a lower starting interest rate than their fixed counterparts. Also, variable rates generally aren't in danger of rising until after a certain introductory period.

Therefore, if you plan on selling your home and paying off your loan, you don't need to worry about rates rising. As a bonus, you can also take advantage of the initially lower interest rate.

Loans with variable rates can also contain more flexible features than fixed-rate loans, meaning if you have special needs that need to be accounted for, opting for a variable-rate option might suit you better.

However, in many cases, taking out a fixed-rate loan is the safer option.

Even if you can get lower interest rates at first with a variable rate, costs will eventually rise. Only people with a fixed-rate mortgage can rest easy knowing they'll be paying the same rate they locked in from the beginning throughout the entire length of their loan.

You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we'll call you!

Share on:

DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.