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Fixed
rate loans has a set interest rate for a
period of time. This means you know exactly
what your repayments will be for your fixed
rate term.
What to watch out for:
▪
Most products do not
allow redraw, however, there are some
lenders that allow for this
▪
Some lenders limit the
amount of extra repayments you can make or
allow no extra
repayments at all.
Look out for products with unlimited
repayments
▪
Offset accounts are
generally not attached to a fixed loan. Look
out for products where
you can attach an
offset account
▪
Fixing the interest rate
for a period of time insures against future
rate rises
▪
It is easy to budget for
the same regular repayment each month
▪
If interest rates fall
you may pay more for your loan than
borrowers on variable rates
▪
Most lending
institutions penalise you for making
additional repayments
▪
You may be penalised if
you pay off your home loan before the due
date
Advantages
▪
Good for budgeting because you know what
your exact repayments will be for the fixed
term
▪
Some fixed loans can have a redraw and
offset account attached
▪
If interest rates increase then you may
benefit by paying a lower interest rate
▪
A mortgage reduction
program can be helpful in managing this type
of loan
Disadvantages
▪
Usually
more expensive than variable rate loans
▪
If interest rates decrease, you may not
benefit from lower repayments
▪ Usually
these loans come with upfront and ongoing
fees
▪ Generally,
offset accounts and a redraw
facility are not attached to these loans
▪
Limited to the number of extra repayments
you can make without penalty
There are many types of fixed rate loans
offered by a number of lenders. To find the
better fixed loan types click the link
below.
Compare Fixed Rate
Loans
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