Introductory Variable Rate Home Loan Comparison
When you are repaying a home loan you want to make sure you are getting all the help possible and an introductory variable interest rate can make it easier in the beginning, guaranteeing you lower repayments as you ease into repaying your new mortgage. Of course while an introductory low interest rate can help you out in the first few months or years of your loan, it can also become a burden if you don’t plan for the end of the low standard variable rate period.
Featured Introductory Variable Rate Home Loan
Apply for Loans.com.au – Dream Catcher home loan and get a low variable interest rate, plus no application fee and no additional repayment fee.
- Interest Rate of 5.85%
- Comparison Rate of 6.21%
- Application Fee of $0
- Maximum LVR With LMI: 80%
- Minimum Borrowing: $50,000
- Maximum Borrowing: $750,000
Featured Variable Rate Home Loan Comparison
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au – Dream Catcher |
A low interest rate home loan with a $0 application fee. | 5.85% | 6.21% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 Bankwest Online Home Loan |
A home loan with a low interest rate. Plus no application fee, no ongoing fee. | 5.97% | 5.97% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 Illawarra Home Loans Bank Beater Home Loan |
A low variable rate, beaten down even further by 0.05% p.a. after 5 years. | 6.07% | 6.35% | $0 / $345 | 90% | $250,000 / $1,000,000 |
|
 Aussie Select Basic Variable loan (LVR (70.01% – 80%)) |
No Account Keeping fees and a low ongoing rate. | 6.20% | 6.25% | $600 / $0 | 70.01% – 80% | $100,000 / $5,000,000 |
|
 Newcastle Permanent Premium Plus Package Home Loan |
Enjoy a low variable rate home loan plus enjoy flexibility on repayment. | 6.03% | 6.35% | $0 / $350 | 95% | $5,000 / $10,000,000 |
|
 CUA 1 Year Introductory Variable Rate Home Loan |
A low rate home loan with a low ongoing fee | 6.09% | 6.49% | $600 / $0 | 80% | $10,000 / $5,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan |
A low rate home loan with a bonus rate drop of 0.25% after 5 years. Plus no application fee for a limited time. | 6.02% | 6.23% | $0 / $345 | 95% | $150,000 / $1,000,000 |
|
 ME Bank Members Package – Eligible members with a Member Package |
One of the Lowest Introductory Rates on the Market | 6.19% | 6.19% | $0 / $395 | 80% | $50,000 / $2,500,000 |
|
Loans.com.au – Dream Loan Express – Variable Home Loan (80.01% -95%) |
A home loan offer with $0 application fee and one of the lowest available home loan interest rates in the market. | 6.20% | 6.22% | $0 / $0 | 80.01% – 95% | $50,000 / $750,000 |
|
 UBank UHomeLoan (Variable Rate) |
Featured home loan with a low interest rate and $0 ongoing fee. | 5.83% | 5.83% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 NAB National Choice Package ($250,000 and above) |
Discount of 0.70% p.a. off the standard variable home loan rate with the NAB Choice Package. | 6.29% | 6.65% | $0 / $395 | 95% | $250,000 / $10,000,000 |
|
CUA Discounted Variable Home Loan |
No Account Keeping fees and a low ongoing rate. | 6.47% | 6.38% | $600 / $0 | 80% | $250,000 / $5,000,000 |
|
 Super Rate Fee Saver Home Loan |
Fantastic rate and no fees backed by competitive features including free redraws, salary crediting and flexible repayments. Perfect for first home buyer or upgrader. | 6.25% | $0 / $0 | 95% | $50,000 / $2,000,000 |
|
|
 Easy Street Honeymoon Home Loan Special |
Save money with a discounted interest rate for 12 months. | 5.89% | 6.56% | $500 / $0 | 95% | $100,000 / $2,500,000 |
|
 Resi Home Loans – Flexi Fix |
Fix up to 50% of your home loan at a low fixed rate and the other 50% at a low variable rate. | 5.99% | 6.75% | $0 / $0 | 95% | $50,000 / $2,000,000 |
|
Introductory home loans are often also called honeymoon home loans because they are very popular with first home buyers who have saved hard for their deposit and other home loan costs, and need a little more room in their budget while they rebuild their savings. Anyone can benefit from an introductory variable rate though, even if you are a second home buyer, refinancing or investing.
An introductory variable interest rate will be applied to an introductory home loan for a set period of time. This introductory period could last for anywhere from six months to three years. At the end of the introductory period, your home loan interest rate reverts to the lender’s standard variable interest rate for your loan type.
There are two ways a variable interest rate may be discounted in the first months or years of your loan:
- A set discount. An introductory loan can offer a discount of the standard variable interest rate for an introductory period. For example, if your lender’s standard variable rate is 7% and your introductory discount is 0.5% then you will save 0.5% for the entire introductory period, so if your lender raises their rates to 7.25% you will pay 6.75% and if their rates go down to 6.50% you will pay just 6% interest.
- A set discounted rate. An introductory variable rate can also be in the form of an ongoing lower interest rate which is set at 6% for example, where the lender’s standard variable rate is 7%. However, in this instance the discount can be diminished if the lender lowers their interest rates because where you were saving 1% if the lender drops their rates to 6.75% you are only saving a quarter of a percent. At the same time, your repayments are fixed for the introductory period, which can also be helpful when you are just starting out.
With any introductory variable interest rate it is important to remember to not only compare the discounted rates, but also the revert rates as this is the interest rate you will be paying for the majority of your home loan’s life.
What are the benefits of introductory variable rates?
Securing a discounted interest rate is always a benefit, but you also want to make sure you will be able to make the most of the advantages of an introductory variable interest rate home loan, to ensure this is the right loan choice for you.
Therefore, consider whether you could benefit from:
- An ongoing introductory low interest rate. With an introductory variable interest rate you will remain several steps ahead of official interest rates in the first few months or years of your loan. This can influence your choice of loan, because you may be worried about interest rate rises, but not ready to lock into a fixed rate loan, but with an introductory variable rate, you don’t have to.
- An introduction to loan repayments. If you are a first home buyer, mortgage repayments can come as a big shock to your budget. Even if you are buying a second home or refinancing, you may be borrowing more money, and therefore looking at higher repayments. However, an introductory variable rate will allow you to introduce a lower loan repayment into your budget, adjust to that, and then find that little bit more room for your regular repayments, rather than being shocked in full repayments from the beginning.
- Some of the lowest interest rates available. Introductory variable rates are becoming a very competitive loan product and as a result are some of the lowest available on any loan type.
- More funds for new home costs. When you buy a new home there are more costs than just repayments, loan fees and stamp duty to worry about. There are moving costs, the cost of new furniture and of course paying for the house warming party. With a lower introductory variable rate on your home loan, you can free up cash for these new home costs.
- Can choose flexible repayment options. An introductory variable rate can be applied to various types of loans, so if you shop around you can find a loan with additional repayment and redraw facilities, and even an offset account to save you even more.
What are the pitfalls of an introductory variable rate?
As with any loan product, if you use an introductory variable rate loan outside of its intended parameters you can be penalised. Therefore, make sure you can avoid pitfalls such as:
- Higher exit fees. Lenders are able to offer lower introductory rates because they know they will be getting their costs back from you in interest and fees over the life of the loan. Therefore, if you choose to exit your introductory variable rate loan during the introductory period, or even within the first few years after the introductory period has ended, you can be faced with high exit fees.
- Some limited features. Make sure your introductory home loan has all of the features you want and need in a loan, as some may limit the number or value of additional repayments which can be made during the introductory period.
- High standard variable rate. When comparing introductory variable rates, be sure to compare the lender’s standard rates too because you could be faced with much higher repayments than expected when your introductory rate reverts to the standard rate.
How can you find ongoing lower interest rates on your home loan?
If you are not suited to an introductory variable rate loan because you need a low doc loan because you are self employed, or you are building your own home and need a construction loan, then you may be able to take advantage of other loan features which help you attract a lower interest rate.
Introductory variable rate home loans can also be found with some or all of these features, so you can continue to save on interest with:
- An offset account. An offset account is a transaction account which is linked to your home loan account and the balance of the offset account reduces the amount of your loan which attracts interest. For example, if you have a $250,000 home loan and you have $10,000 in your offset account, you pay interest on just $240,000. This then means your monthly repayments are lower as they are made up of less interest, so if you continue to make the same monthly repayment, the extra amount will come directly from your principal loan amount, and you can repay your loan sooner, because you pay less interest.
- A professional package discount. Many lenders will offer a discounted interest rate as part of a professional package if you borrow over a certain amount. The discount often increases the more you borrow and can be an ongoing interest rate discount for the life of the loan, up to 0.7%.
- A basic home loan. A basic home loan is one without any additional features or products attached. As such, this simple loan product charges the lowest interest rate of any loan product, often up to 2% lower than a standard variable interest rate loan.
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