One of the most common questions asked by Home Loan customers is whether they would be better served with a Fixed Interest Rate or a Variable Interest Rate.
The first step to seeking an accurate answer to this question is to understand that each borrower / family have differing financial requirements and priorities thus there can be no “One Right Answer” that will apply to all.
Listed below is a brief summary of the Advantages & Disadvantages of Variable & Fixed Interest Rates plus several Insider Tips which may assist you to determine the best Home Loan structure to suit you and your family.
Fixed Interest Rates
Advantages
- Immune from higher interest charges due to rising interest rates
- Comfort of knowing your loan repayments cannot change for the entirety of the fixed rate term
- Current fixed interest rates are priced at record low levels
Disadvantages
- Restrictions or penalties may apply if you wish to make additional repayments to your Home Loan
- Borrowers may not have the ability to redraw any surplus funds from their Home Loan
- Significant penalties may apply if the Home Loan is repaid in full within the fixed rate term
Variable Interest Rates
Advantages
- Most flexible type of Home Loan
- Interest charges and loan repayments will reduce if interest rates fall
- Additional repayments can be made at anytime thus reducing interest costs and assisting you to pay off your loan sooner
- Redraw is available
- 100% Offset Account can be linked to your Home Loan (if available)
- All or part of your Home Loan can be converted to a fixed interest rate at any time
Disadvantages
- Loan repayments will increase if interest rates rise
Insider Tips
- Home Loans can include a combination of Fixed & Variable Rates to enable you to achieve the benefits of both
- NEVER select a Fixed Rate term that will exceed your known plans and strategies
To request assistance from an experienced Mortgage Specialist simply click on CONTACT US
or phone (07) 5527 4744
