All Fixed Rates Home Loans
Fixed Rate Home Loans – Which One is Right for You?
If you are about to become a homeowner, you need to decide between a fixed or a variable interest rate loan (or a mixture of the two). A variable rate is just that – variable, changeable. This type of rate goes up and down with the financial market. These days that might not be the best bet. On the other hand, a fixed rate loan gives you the chance to lock in a low interest rate – and to keep that rate for one to ten years (with the option of then fixing the rate again). Because your interest rate remains the same, so do your monthly mortgage payments. Many homeowners-to-be are looking for just this kind of security. Those who already own their homes can also take advantage of a fixed rate mortgage by refinancing.
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Due to the variety of exciting new products available, and relatively low interest rates, fixed rate loans are becoming more and more popular in Australia. With inflation seemingly on the rise, some financial experts believe this type of loan will only become more widespread. People are looking for security. And security can be found in the following fixed rate loan opportunities:
One to Two Year Fixed Rates - These are typically for those individuals who want to “try out” a fixed rate. Not ready to commit to the longer term, these homeowners want to see what happens when they lock in a low interest rate for a short time. New homeowners will enjoy this nice introductory loan. If nothing else, locking into a short term fixed rate loan will let you see what it's like and, at the end of the one to two years, decide if that's the type of loan for you.
Three to Four Year Fixed Rates - These are by far the most popular fixed rate loan terms. With these medium periods of time, borrowers get security and some flexibility, without feeling locked into anything long term. Literally. Consumers are able to see all of the benefits of fixed rate mortgages because, chances are the financial climate will have changed over three to four years. Once your term is over, you will have the knowledge to decide whether you agree with the fixed rate philosophy.
Ten Year Fixed Rates - This long term fixed rate loan locks in rates and savings at the same time. Because your payment and interest rates are already determined, you become less of a financial risk, thus convincing lending institutions to offer you more financial opportunities. This is advantageous if you make investments at a professional level. Because at least part of your portfolio is fixed, you are free to take risks on other investments. Also, if you are a homeowner who really needs to stay within budget for a specific time and would not be able to financially withstand any sort of increase in your monthly expenses, the ten year rate might be perfect for you. You are guaranteed to have the exact same payments for an entire decade.
No matter what type of fixed rate loan you end up choosing, you need to know the following about the terms of your loan:
1. Do you have the flexibility to make extra repayments? The majority of fixed rate home loans let you do this.
2. Are there any monthly account fees? Usually there are not. Sometimes, for a nominal fee, lenders will offer you a lower lock-in rate (the rate at that very moment, instead of when you submit your application a day or two later).
3. Can you borrow money against your mortgage? Most fixed rate loans allow you to redraw.
