Fixed rate loans need to be treated with caution, due to being fixed to a lender for a period of time. This is the main difference between fixed and variable loans.
Fixed rate loan options include:
- Three year fixed loan
- Five year fixed loan
- 10 year fixed loan
Should I fix or not?
Fixed rate loans aren’t for everyone and the first step is determining if they really are for you. Often people are more prone to fix rate loans when the rates are high because they are worried that they will continue to rise. However this is not an effective strategy. If the reserve bank then cut interest rates, you leave yourself in a bad situation.
Due to fix rates being in place for between 3 to 5 years on average, this means that it’s important to do your research and ensure that through obtaining a fixed rate, it will be the best option for you.
Often, a variable rate is still the best option as fixed rates have high exit fees.
If you are considering the following:
- Selling your property
- Large repayments
If you are doing any of the following, a fixed rate home loan is not for you.
Speak to our finance experts on 1300 088 065 or enquire here about what sort of loan is right for you, fixed rate or variable.