When to Fix a Home Loan

With interest rates at record lows, the question that is being asked by many is ‘should I fix in my home loan?‘. It’s challenging to predict where interest rates might be in the future, so deciding when to fix your loan in can be tricky. I’ve found most fix in when rates are going up.

The average consumer will generally go straight to their bank to discuss fixed rate options and try to negotiate. Unfortunately this strategy is flawed as most banks and lenders have completely different offerings when it comes to fixed rates – some also have no ability to negotiated a better fixed interest rate.

When fixing your loan in its also important to remember that fixed rates can have ‘break costs’ and limit the ability to make extra repayments. If you’re planning to sell the property, make extra repayments or refinance from your existing lender, a fixed rate option might not be suitable given the additional fees and charges that will be applicable due to ‘breaking’ the loan.

The advantage of fixing in, particularly if you are on a tight budget, is that you can forecast the exact mortgage repayments for the period you’ve fixed in for. This give peace of mind as well as no surprises when the reserve bank meet up on the first Tuesday of each month.

A mortgage broker can negotiate on your behalf to get a great fixed rate offer from one of the lenders on their panel. To find out how Hunter Galloway can help you call Nathan Vecchio on 0410 000 689.

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