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rate charged on a variable loan moves up or down in
accordance with movements in interest rates, as set
by the Reserve Bank. Basic variable loans generally
have fewer loan features than a standard variable loan.
Basic variable loans are suitable if you are looking
to pay off a consistent amount over the full term of
the loan, but are not suitable if you are looking to
pay off your mortgage quickly.
Pros:
Repayments
fall when official interest rates fall
Standard variable loans offer flexibility and additional
features, such as the ability to make additional payments,
such as a redraw facility (take out any extra money
that you have put in), low introductory or honeymoon
rates
Allows careful borrowers to pay off the mortgage quickly
by not having any penalty for advance payouts
Cons:
Higher
interest rate is higher for standard variable loans
than basic loans because they usually offer additional
features
Repayments rise when official interest rates rise
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