Fixed Rate Home Loans for Interest Rate Certainty
The security of having set loan repayments irrespective of interest rate fluctuations is the reason why many Australians opt for Fixed Rate Home Loans. Variable rate products are still more popular in Australia, but fixed rates tend to gain popularity when variable rates start to drop.
Fixed Rate Home Loans are based on a fixed rate for a set term, usually between six months and 10 years. When the fixed-rate term expires, the loan will usually revert to a variable rate loan unless you decide to rollover for another fixed term. While fixed rate loans offer the certainty of having a set repayment amount, they do not generally allow you to make additional repayments, which will often be a crucial feature if you are looking to pay off your mortgage sooner.
Should I fix my home loan?
If you are contemplating getting a fixed rate home loan, then you need the average variable rate to remain higher than your fixed rate during the fixed period, if you are to reap the benefits. However, if you believe that we are at the top of the interest rate cycle, then it wouldn’t be a good time to fix.
On the other hand, the security offered by fixed rate loans means that you are able budget with certainty. At the end of the day, you would need to consider a number of economic factors in addition to your own budgeting needs before make the decision to get a fixed a rate home loan.
Fixed Rate Home Loans Assessment
Get your mortgage broker to determine if a fixed rate home loan is the right mortgage management solution for your situation. Simply email us the form on this page or call 13 LOAN (or +61 2 9249 3739) and we will contact you within 2 business hours.
How Fixed Rate Home Loans Work
While variable rates are driven by Reserve Bank policy and external market factors, fixed rates are driven predominantly by investors who put their money out to the fixed rate wholesale market. And while this means that fixed rate home loans offer more certainty than variable rate home loans, fixed rates are still subject to changes that occur in the wholesale market.
Different banks and lenders are always offering fixed rate specials, it is worthwhile to talk to your local mortgage broker so you know what is going on.
Advantages and Disadvantages of Fixed Rate Home Loans
| Pros | Cons |
| Borrowers have certainty of fixed repayment amounts even if interest rates rise. | Reduced flexibility – if interest rates fall, the repayments will not, as the rate remains fixed |
| The interest rate is usually cheaper than more flexible products | Should you sell your property during the fixed rate period and want to clear the loan in full, you could be up for fees, depending on where rates have moved from the time you originally fixed your loan. |
| Additional repayments are limited, and exceeding these limits may incur costs and fees |
More information and home loan help
For more information on how and where to find a better home loan deal from an extensive panel of Australian banks and secure mortgage lenders, or to speak to your local area mortgage expert, contact us on 13 LOAN (direct +61 2 9249 3739)
