Fixed Rate Housing Loan


Fixed Rate Home LoanGetting 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.

5. 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.