Fixed Interest Rate Loans
During interesting economic times when interest rates are on the upswing, many home owners are tempted to take out a fixed rate home loan.
Fixed rate home loans offer home owners the opportunity for their interest rates and therefore their repayments stay the same for the term of the loan - in other words, stay fixed instead of being variable, at the mercy of the market.
Fixing your home loan offers home owners the peace of mind knowing that they know what their repayments are going to be regardless of what the Reserve Bank decides to do with interest rates. Most lenders are happy to offer fixed rate mortgages in Australia. One thing to be aware of though is that fixed rate home loan rates are often higher than the variable interest rate so even though you have the peace of mind knowing that you will be able to afford to meet repayments in the future, right now your repayments will be higher than they were if you had a variable rate.
In the end are you saving money? It’s a gamble. In some situations, if interest rates continue to rise, considerable savings can be made by borrowers. Having said that, if interest rates fall, fixed rate mortgages often cost home owners much more than they need to. Another challenge with fixed rate home loans is that there are often hefty early payout penalties associated with these types of loans. That means, if you sell the property or if you simply decide to move financial institutions you may find yourself significantly out of pocket.
When weighing up the pros and cons of fixed rate mortgages in Australia, consider the interest rate, the term, the early payout penalties and other exit fees, the establishment fees and other terms and conditions. The decision of whether to go with a variable interest rate or fixed interest rate loan can be a difficult one so it’s important to be fully informed before you take that step. Not only that, it can be confusing knowing which financial institution offers the best fixed rate home loan. We can help you with that. Talk to a Wealth Concerns mortgage broker and we’ll wade through the hundreds of different loans on the market and then walk you through the different features of each type of suitable home loan and advise you of the right loan features for your situation.
Contact Us
If you would like to discuss your specific circumstances call us on 1300 700 496 or alternatively text your name and number to 0411 320 962 and we will call you.