How do floating interest rate home loans work?

The interest rate can move up or down in line with the market.  If the interest rate changes you can either, keep your repayments the same but change the term of your loan, or keep the term of your loan and change your repayments.  For example:

• If the interest rate goes down – you can either keep your repayments the same which means you’ll pay off your loan earlier, or reduce your repayments and repay your loan over the same term
• If the interest rate goes up – you can either keep your repayments the same which means you’ll take longer to pay off your loan, or increase your repayments if you want to repay your loan over the same term.

Benefit of floating interest rate home loans

• Flexibility – you can make lump sum repayments, or even repay the entire loan, any time you want to, at no additional cost.

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