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Also referred to as a variable rate loan, your mortgage’s interest rate rises or falls based on market shifts that are linked to the Official Cash Rate. This is a good mortgage option if you want more repayment options such as paying off bigger sums without penalties, or you think the market is about to move in a certain direction and you want to fix your mortgage at a later date. Due to market uncertainties, floating rates are often higher than fixed rates, so this kind of mortgage approach is used when you need to be strategic in the short term.
You also have the option of splitting your mortgage between a fixed and floating rate. This way you can make additional repayments on the floating mortgage portion without being charged extra on the fixed rate side. Choosing this option comes down to personal preferences.