You are here: Home › Home Loans › Sovereign Home Loan › Floating Interest Rate Loans

Floating Interest Rate Loans

 Sovereign Logo

 

Floating Interest Rate Loan

 

Sovereign Go Home Loan (Revolving Credit)

Please note: If you find any of this confusing, don't worry we can explain it all to you in plain English and in the context of your situation and your financial goals.

 

Floating Interest Rate Loan

Sovereign's variable interest rate home loan offers the benefits of a structured repayment plan with good flexibility to make lump sum repayments.

 

How a floating interest rate loan works

The cost of borrowing will fluctuate with changes in the interest rate market.  The loan is flexible and can usually be repaid in full without notice and without penalty.

The floating interest rate market is significantly affected by the Reserve Bank's management of monetary policy and the Official Cash Rate (OCR), which is reviewed 8 times per year.

 

A floating interest rate loan is best suited to

  • Customers who want to repay their loan faster and keep tighter control over their finances.
  • Customers who often have extra money they’d like to put towards their home loan.
  • Customers who want the flexibility to make lump sum payments without penalty.

 

Features and benefits of Sovereign's floating rate loan

  • Maximum term: 30 years.
  • Repayment frequency: fortnightly or monthly.
  • Extra repayments: you can make additional loan payments anytime without penalty.

 

 

Sovereign Go Home Loan (Revolving Credit)

Sovereign's Go Home Loan is a transactional account with a credit limit that will reduce over time. The Go Home Loan gives you the flexibility to redraw up to your reducing limit, but ensures that your loan is repaid by the term you select.

 

How revolving credit works

A revolving credit loan is a transactional account that is very similar to an overdraft. The cost of borrowing will fluctuate with changes in the interest rate market.  The loan is flexible and can usually be repaid in full without notice and without penalty.

Sovereign's revolving credit loan has a reducing loan limit which will amortise (reduce) in the same way a table loan is repaid.  Interest is charged on the daily outstanding balance.

By paying your salary (and any other income) directly into your revolving credit loan you immediately lower your loan account balance and the amount of interest you pay.

If you use your credit card for your everyday purchases, you can keep your revolving credit account balance lower for longer. To maximise the benefit, you must always pay your credit card balance in full on the due date.

See here for an explanation of how to manage a revolving credit loan.

 

Sovereigns revolving credit loan is best suited to

  • Ideal if you want to repay your loan faster and keep tighter control over your finances.  
  • Useful if you think you may want to redraw up to your reduced limit occasionally. 
  • Customers on a good income who often have surplus funds available.
  • Customers who are good money managers.

  • Customers what want an ongoing credit limit that can be accessed at any time.

  • Customers wanting flexibility to make repayments and redraw up to their credit limit without needing to re-apply.

 

Features and benefits of Sovereign's Go home loan

  • By transferring your salary and any other income directly into a Sovereign Go home loan, you can immediately lower your daily account balance, reducing the amount of interest you have to pay over the term of your home loan. The account can be used as a transactional account and you’ll have easy access to funds for living expenses and purchases as required. The more money you keep in the account, the lower the interest amount over the term of the loan. 
  • A floating interest rate can move up or down according to what's happening in the market.  This means that your repayments may increase or decrease.
  • The advantage of having your home loan at Sovereign's standard floating rate is that you have maximum flexibility, enabling you to increase your repayments or make lump-sum repayments at any time without penalty.
  • The Go home loan combines your cheque, savings and home loan accounts into a single easy to manage package.
  • Limit reduces in the same manner as a table loan. 
  • Redraw up to the reduced loan limit at any time.  
  • There is no monthly account fee.

 

You have unlimited free:

  • EFTPOS transactions
  • Internet banking e-Cheque, bill payment and automatic payment transactions
  • Telephone banking transactions
  • Loading and changing automatic payments online
  • Loading and changing bill payments online
  • Transactions at ASB Bank ATMs.