Fixed Interest Loan

What is a Fixed Rate Loan?

A Fixed Rate Loan is when the interest rate and repayments on the loan is fixed for a certain period of time.   The fixed periods usually range from 1 year to up to 10 years.

For example: If you wish to fix your home loan for a period of 5 years, the loan will usually revert to a variable rate at the end of the 5 Years.

This type of loan is useful for a home owner or investor if they need to know the exact amount that their loan repayments will be each month. Where as a variable loan will vary slightly from month to month. A Fixed Rate Loan will remain the same.

The term of the fixed rate will vary depending on your personal and financial needs.

For a number of borrowers a fixed rate loan is a very useful especially if they are on a very tight budget, or they are expecting to start a family and will have to rely on one income for a number of years.

Having a fixed rate loan and knowing the exact repayments required can not only assist with budgeting but will give peace of mind to those that worry about a possible rise in interest rates.

There are usually costs involved should you wish to fix your loan for another term.

Loan Term: 1 to 5 Year terms. Some lenders offer 7 and 10 Year terms.

Features Offered:

• Loan Splits available. Where as you can split the loan and have a fixed interest rate on one split and variable loan on the other.
• 1 to 5 Year terms. Some lenders offer 7 and 10 Year terms

Advantages:

• The home owner knows what their repayments amount will be, as the amount is fixed and does not change.
• If interest rates increase, the repayments do not increase.

Disadvantages:

• Limited or no extra repayments. Some lenders will charge a fee for making extra repayments over and above set amount.
• If interest rates decrease then the home owner or investor will not benefit from the rate decrease.
• No redraw available in most cases.
• Interest rates are usually higher than most Variable rates that are offered at the same time.
• Less flexibility in the loan.
• If you get out of fixed rate term, then there are usually extra costs that you will be charged. I.e. “Break Fees”

Contact Us If you would like to discuss your specific circumstances call our message service on 1300 700 496 with your name and number and we will contact you back.

Alternatively text your name and number to 0411 320 962 and we will call you.