1 Year Fixed Home Loans
12 Months Fixed
Australian home loan products come with a variety of options. Interest rates for mortgages may be fixed or variable. If you apply for a one year fixed home loan, it means your mortgage interest rate will be fixed for your first year – and with most Australian lenders, you can choose up to seven years with a fixed rate.
Fixed rate home loans are calculated based on predictions. Home loan lenders predict whether interest rates will be increasing or decreasing, in an effort not to lose money on fixed rate products. Individuals who choose a fixed interest rate generally receive interest rates that are higher than variable home loan rates set by the Reserve Bank. If lenders predict home interest rates will not increase as much in the next year as it will over the next 3 years, you could receive a one year fixed rate home loan with a lower interest rate than you could if you chose a 3 year fixed home loan product.
Compare these loans with 194 other products
| Lender | Product | Rate | Min deposit | 100% offset | Redraw | Extra Repay | Constr- uction | Enquire |
 | NAB Choice Package Fixed 1 Year | 5.79% | 5% |  | | |||
| NAB Tailored Fixed 1 Year | 5.89% | 5% | | | |||
 | Citibank Fixed 1 Year | 5.89% | 10% | | ||||
 | ING Direct Fixed 1 Year | 5.89% | 10% | | ||||
 | St George Advantage Package Fixed 1 Year | 5.94% | 10% | | | |||
 | Westpac Premier Advantage Fixed 1 Year | 5.99% | 13% | | | | ||
 | CBA Wealth Package Fixed 1 Year | 5.99% | 5% | | ||||
 | AMP Fixed 1 Year | 6.09% | 10% | | ||||
 | Heritage Bank Fixed 1 Year | 6.09% | 10% | | | |||
| St George Fixed 1 Year | 6.09% | 10% | | | |||
| CBA Fixed 1 Year | 6.14% | 5% | | ||||
| Westpac Fixed 1 Year | 6.19% | 13% | | | | ||
 | ANZ Fixed 1 Year | 6.19% | 13% | | | | ||
| NAB Rural Lifestyle Fixed 1 Year | 6.29% | 30% | | ||||
 | BankWest Fixed 1 Year | 6.39% | 10% | | | |||
 | La Trobe Financial Fixed 1 Year | 9.19% | 25% | | |
Fixed Repayments for 12 Months
When you choose a one-year fixed rate home loan, you know what your loan repayments will be for the next 12 months. There are no surprises even if the Reserve Bank of Australia interest rates increase or decrease. For budgeting purposes, knowing exactly what your monthly repayments will be eliminates some of the stresses involved with fluctuating payment amounts. During your fixed repayment period, you can allocate the rest of your money freely to other debts and expenses and not have to worry about needing additional funds for a higher payment when the interest rates increase. Many first time home buyers choose a fixed rate home loan product, as do people with fluctuating incomes.
The downside of a fixed rate home loan is that you don't benefit if the interest rates decrease. You pay the same even if the rates drop drastically. Also, you are not allowed to make extra repayments on one year fixed rate home loans, and if you try to send extra payments you can even get penalized.
When Fixed Rate Contracts Are Terminated
A home loan is a contract between the lender and yourself. If you decide to sell the property or refinance the home loan or change from a fixed rate product to a variable rate – you can expect to pay termination fees. Your original one year fixed rate home loan contract will contain a formula explanation as to the calculation of the termination fee. The lower the variable interest rate is in comparison to your current fixed rate, the higher your termination fee will probably be.
Before agreeing to a one year fixed rate home loan, it's important to understand what the termination fee may be if you think there's a chance you may change your mind for any reason. Most experts advice against fixed rate loans simply because they tend to have higher interest rates than the variable rate – but for individuals who feel the interest rates are about to increase, locking in a fixed rate is ideal. Going with a shorter fixed rate term, like one year, is a good compromise and lower risk for you.
What Happens To Your One Year Fixed Rate Loan After the Year Ends?
When your one year contract comes to an end, your fixed interest rate will revert to the standard variable rate. Some fixed loan products give you an option to fix the interest rate again for a new term period; if this is what you're looking for make sure you ask the lender before agreeing to the one year fixed home loan. To prepare for your new repayments after your fixed interest rate changes to a variable rate, you should ask your lender at the time of signing your one year fixed rate home loan to estimate what the standard variable interest rate will be when your term comes to an end, so you can figure out what your repayments will be at that time and prepare for them.
