Fixed Rate Home Loan

Getting a fixed rate home loan will give you certainty and security. This is because unlike a variable rate home loan which features an interest pegged to the official cash rate, a fixed rate home loan has an interest rate which is determined by bond yields. A fixed rate home loan allows you to lock in the interest for a certain period of time, usually from one to ten years. If you want to get a fixed rate home loan with an interest only facility, then you will most likely be able to lock in the interest rate for 1 to 5 years. Since the interest rate is locked for a specific amount of time, you will be protected from interest rate increases within the duration of the fixed term.

Once the fixed term is finished, the interest rate of your fixed rate home loan will typically turn into a standard variable rate unless you choose to rollover to another fixed term. You may also choose to switch to a split loan (a mixture of both fixed and variable rates) after the end of the fixed term of your fixed rate home loan. It would be good for you to ask your mortgage lender or broker about the features of your fixed rate home loan. Ask whether you'd be able to make extra repayments without penalty or if your fixed rate home loan includes redraw facilities.

A Fixed Rate Home Loan Is Suitable For:

• Those who want their interest rate to stay the same for a certain period of time
• Individuals who would like to plan their finances and stick to their budget even in times of economic uncertainty
• Homeowners who would like their repayments to stay the same every payment period

Why A Fixed Rate Home Loan Is A Good Choice

A fixed rate home loan will give you more security since you won't have to worry about increases in the interest rate. Getting a fixed rate home loan will also help you budget and plan your finances because you're certain that your payments will remain the same every payment period.