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If you’re on a fixed budget and don’t like the uncertainty of rising and falling interest rates, then a fixed home loan rate may well be for you. There are, of course, both pros and cons attached to a fixed rate mortgage, so before you decide on a fixed or variable rate, it certainly makes sense to get expert advice. ITP have been helping Australians for over 40 years with their finances, so get in touch with ITP Home Loans today.
Benefits of a fixed rate home loan
Interest rates are at all time low in Australia today, so it may well be worth locking in a low rate. Plus:
- A fixed interest rate makes it easier to budget. You’ll know precisely what your repayments are going to be.
If interest rates go higher than your fixed rate, your repayments will stay the same. Variable rate repayments would, of course, rise.
The downsides to fixed home loans
There are certainly drawbacks to fixed rate mortgages, so it’s very advisable to think things through carefully before you lock yourself into a fixed interest rate. Your ITP Home Loans consultant will of course go through all the terms and conditions with you, so you won’t get any nasty surprises down the track. Here are the downsides:
- Once you’re locked into a fixed interest rate, you won’t benefit from a fall in RBA interest rates. Prepare to be annoyed when this happens!
- Often you can’t make extra loan repayments, or at least without an added fee, if you have a fixed rate mortgage. This is usually not the case with a variable rate home loan.
There may also be a break fee if you pay off or change your home loan within your loan term period. An example of this would be if you sell your home.
Deciding on fixed home loan parameters
The usual terms of a fixed rate mortgage are one, three or five years. At the end of the period you can choose between:
- Entering into another term of fixed interest rates.
- Changing to a variable rate home loan.
- Refinancing your home loan, either with your current lender or a different one. Check out our refinancing calculator if you’re thinking along these lines.
A friendly, professional ITP broker is the person to talk to if you need home loan deposit help. He or she will talk through some options most suited to you, and find the most appropriate loan type and interest rate for you. Email us, or make an appointment to see an advisor face to face. Alternatively, give our helpful ITP Home Loans consultants a call today on 1300 387 487.
In the meantime, check out our handy home loans calculator, to give you an idea of how much you can borrow.