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Fixed Rate Housing Loan


Fixed Rate Home Loan

Getting a great deal on your fixed rate loan is an excellent option as it helps to ensure that you will be getting the very best rate throughout the course of your repayment period. Unlike variable loans, however, fixed-rate loans need to be chosen carefully. At Hunter Galloway, we have identified some of the things that you should take into account when choosing your loan:

  1. Know when to fix your interest rate
    Fixing your interest rate is an excellent choice when interest rates are generally low. This way, you are ensuring that you have a low-interest rate over the course of your loan. However, what sometimes happens is that people fix their interest rates when they are already considerably high because they fear that they will increase even further, and what can happen instead is that the reserve bank cuts interest rates, making them drop below the interest rate you were fixed at. Determining whether it is a good time to fix your interest rates is complicated, but our team of interest rate specialists at Hunter Galloway will be more than happy to help.
  2. Know whether you should fix your interest rate
    People often don’t realize that they would be much better off with a variable rate rather than a fixed rate loan. One of the main reasons for this is that fixed rates tend to have break fees. Break fees prevent you from making large additional repayments so that if you do not closely follow the repayment terms as stipulated in your contract, you will be paying major penalty fees. Take a look at some of the things you will not be able to do if you have a fixed rate loan:
    • Refinance your home loan
    • Sell your property without incurring large exit fees
    • Make a large lump sum repayment
  3. Choose the right lender
    The main strategy that people have when applying for a loan is going to their own bank and trying to negotiate a good rate. The problem with this is that different banks and lenders have entirely different fixed rates. A lot of variety can exist on the market so it is important to have a Hunter Galloway broker by your side to make sure that you are considering all options. Also, our mortgage broker will be able to negotiate on your behalf, making sure that you get a great offer from one of your preferred lenders.

Fixed Rate Home Loan Advantages

Deciding whether you are going to go for a fixed rate or a variable interest rate loan is not an easy decision to make. You might have noticed that the media constantly reports on whether interest rates are going up or down. Sometimes, these predictions are correct, but other times they get it completely wrong. Using media reports to guide an important decision like this one is not the best idea. At Hunter Galloway, we can help you make an educated decision about the type of loan to go for, without actually relying on media reports.

Sometimes, however, what happens when you are in the process of securing a fix rate loan is that the interest rate might change between the time you apply for the mortgage and the time that your loan is advanced. This will mean that you will get a new fixed rate which may be higher or lower than the one that was presented to you at the time of signing. In order to prevent this from happening and ensure that you are getting the initial rate, you can pay a “rate lock” fee. This fee usually amounts to about 0.15% of your entire loan amount, but it will help to make sure that you are protected from rate increases.

Fixed Rate Housing Loan Help

Do you need help in determining whether you should get a fixed rate or variable rate loan? If so, our team at Hunter Galloway can help. We have years of experience in helping our customers make the right decision about the different loan options that are available to them. For a free consultation and more information about the services that we provide, feel free to contact us today at 1300 088 065!

Frequently Asked Questions

Can you switch to a fixed rate home loan from a variable home loan?
Yes you can switch from a fixed rate to a variable, but it may be subject to break fees. Find out the terms when you are setting out your fixed rate home loan from the beginning so that you are aware of the costs involved if you do need to switch your loan.

What’s the difference between a fixed and variable rate home loan?
Fixed rate:
You need to pay fixed interest rates from the beginning with repayment terms varying from 6 months to 15 years. The benefit of a fixed rate is that you can lock in your repayments in the first five years so that you can plan your budget with accurate numbers.

Variable rate:
Variable rates change in accordance with the market index which means that they will fluctuate. The benefit is that variable rates offer flexibility to a borrower because additional payments can be paid, it also allows you to redraw that extra cash if need be too.

I have a fixed rate loan at a high-interest rate. Can I refinance at a better rate?
Yes, first we complete a cost feasibility because the bank will charge you a fixed rate – rate fee. So Hunter Galloway home loan experts will look at the feasibility of that request and see if it will work out to save you money or not.

What is “rate lock”?
Rate lock is where you pay the bank a fee usually around 0.15% of the loan amount the higher of 0.15% or depending and it allows you to secure the advertised fixed rate before your home settles or your interest rate period on your current home loan ends. This is known as a locked rate and you are protected if it rises over this period.

What fixed rate features are available?

Fixed rate features in Australia mean that you can choose how you make repayments, lock your rate when you apply, and use redraw facilities, along with having the option of making extra repayments.

If you make extra repayments you can then redraw those funds if at a certain point you need them again. You may also be able to pause or reduce your repayments for a certain period of time, however later down the track the repayments will then be higher for the remaining part of the loan and will result in higher interest paid overall.

Should You Go For a Fixed Rate Home Loan?

There are some people who are better off with a variable rate home loan because fixed rate home loans can have a high exit fee and as discussed, it may not allow you to make additional repayments. It may not be best to go for this home loan option if you plan to do the following:

  • Refinance a home loan
  • Make large repayments in future, or
  • Are thinking about selling your house in the future

If you intend to do any of these in the future, it may be best to go for a variable rate home loan.


Lenders Offering Fixed Rate Home Loan

Most people prefer sticking to their bank and try to negotiate a better rate. But it is not always an effective strategy. Different lenders offer different rates when it comes to fixed rate home loans based on their anticipation of future interest rates. Therefore, it is better to find a lender who offers the rates and features that are in line with your financial goals. Given below is a list of some banks that are offering a fixed rate loan:

  • National Australia Bank is offering a 12-month intro fixed, tailored home loan, Choice package 10 years fixed, Choice package 5 years fixed, Choice package 4 years fixed, Choice package 3 years fixed, and Choice Package 2 years fixed
  • The Australia and New Zealand Banking Group offers a fixed rate home loan and fixed rate interest in advance loan
  • Suncorp Australia is offering a fixed rate home loan and money manager fixed rate
  • St George has an Advantage home loan package (introductory 1 year fixed rate loan), fixed rate home loan, and Advantage home loan package (fixed rate loan).
  • Westpac offers Premier advantage fixed rate investment loan, Fixed rate interest in advance investment loan, Premier advantage fixed option home loan.
  • Commonwealth Bank of Australia is offering a Fixed rate loan and MAV package fixed rate.


Things to Understand

You should only apply for a fixed rate home loan if you can carefully budget the repayments. It allows you to know the exact repayment amount so that you can plan your finances accordingly. But there are some lenders who charge a certain fee for making early repayments. Therefore, follow your schedule to avoid extra costs associated with the loan. Moreover, some banks have also started offering additional features with this loan, including:

  • Interest only repayments
  • No or low monthly account-keeping fee
  • 100 percent offset facility
  • Redraw facility, and
  • Making additional repayment without any penalty

However, before making any financial decisions, speak to our team of experts as we have years of experience in the market and can guide you in the right direction.