Many borrowers with Variable Interest Rate Home Loans are currently asking themselves whether or not they should change all or part of their Home Loan(s) to a Fixed Interest Rate.
Amanda Tan (St George Bank Treasury Economist) recently announced at a Gold Coast Mortgage Broker Conference that she believes that Variable Interest Rates were nearing their base level and that any further reductions over the next 6 – 12 months would be nominal. Amanda Tan also stated that the 3 Year, 4 Year and 5 Year Fixed Interest Rates are expected to rise in the near future.
Listed below are a few “Handy Hints” to assist those who may be considering switching all or part of their Home Loan to a Fixed Interest Rate:
Handy Hints:
1. Always consider your future short, mid and long term plans when considering a Fixed Interest Rate Term. (Please Note: Fixed Rate Break Costs may be applicable if you terminate your Fixed Interest Rate prior to the expiry of the Fixed Rate Term).
2. Check if the Fixed Interest Rate Home Loan has any restrictions relating to additional repayments and redraw which may impact on any future Home Loan transactions.
3. Many Home Loans can be split into both Variable Interest Rate and Fixed Interest Rate portions which allows you to benefit from the flexibility of the Variable Rate Loan (i.e. additional repayments, redraw, etc) whilst protecting part of your loan from any potential increases in interest rates.
4. Some Banks / Lenders (e.g. Westpac) may offer discounts to their advertised Fixed Interest Rate for new and existing customers (to know more contact David Pattemore).
5. Some Banks / Lenders may discount or waive the fees involved in switching all / part of your Home Loan to a Fixed Interest Rate (to know more contact David Pattemore).
6. The pricing of Fixed Interest Rates are not directly linked to Variable Interest Rates (e.g. Fixed Interest Rates can rise at a time when Variable Interest rates are falling and Visa Versa).