Variable interest rate on a home loan.


A variable interest rate is used for variable loans.

A variable interest rate is used for variable loans.

The bank recalculates the interest every three months during the term. It is based on the Good Finance interest rate.

The borrowing rate of the loan is therefore regularly adjusted to the development of the interest rate level.

A variable interest rate can serve as the basis for partial financing. Variable interest rates are not suitable for the complete financing of construction projects.

Currency US Dollar is calculated and is used primarily in transactions with financial instruments. It can be used as the basis for forward transactions and has been published since 2013 for terms between one week and one year.

The quarterly adjustment of interest rates can reduce the loan installments payable when interest rates are low, but can lead to an additional charge if interest rates rise.

  • Most lenders raise the applicable Good Finance interest rate, which was 0.327% in March 2018, for example, by calculating up to 2% surcharge. In this way, they earn their profit on a variable loan.

Interested in building finance can benefit from variable interest rates on the loan because there is no long-term fixed interest rate.

A variable interest rate as the basis for the loan has the advantage that the loan can be terminated using very short deadlines (usually 3 months). In this case, the lender does not ask for prepayment penalty.

To hedge against excessively high interest rates, such a loan can be concluded with an interest cap. If this is achieved, the loan can be converted into a normal repayment loan.

Variable interest rates involve risks

Variable interest rates involve risks

In addition to many advantages, there are also risks with interest rate variability that the customer should consider:

  • The interest cap must be paid with 2 to 3% of the loan amount
  • Variable rate loans involve high processing fees of around 1%
  • Funding is required to repay the loan
  • Knowledge of the processes on the interest market is necessary
  • Rising interest rates can lead to significantly higher rates

In any case, it is worthwhile for the borrower to weigh up the advantages and risks as well as a comparison between the conventional loan and one that uses a variable interest rate.


The risk of facing unaffordable rates is too great. If you only want to negotiate partial financing with the bank, variable interest rates can also be considered.

  • A comparison of the individual providers of a loan, based on a variable interest rate, can help you find the right lender and calculate the best conditions.

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