A Fixed Rate Home Loans offers you steady repayments each month. If you are on a fixed income, it’s nice to know that your repayments won’t be changing. This makes household budgeting easier.
If you don’t like surprises and you are working on a budget, Fixed Rate Home Loans are most suitable for you. Moreover, the interest rate on a fix loan is often a bit lower than the interest rate on a variable home loan, so you can save more money.
At the end of the fixed period, you have the choice of switching to the standard variable rate home loan or another loan product. When is it a Good Idea to Fix the Interest Rate on a Home Loan ? Home loan interest rates are tied into the economic cycle. Fixed Rate Home Loans are the most cost effective option for you if the interest rate cycle has bottomed and looks like increasing. It is best to do some research on the current economic news and trends to get an idea of where rates could be heading. Pros and Cons of a Fixed Rate Home Loans
Advantages of a Fixed Rate Home Loans
- Your repayments will not change during the selected fixed term, making it easier to budget. You have the peace of mind knowing your repayments won’t increase.
- If you fix your rate at the right time, you can pay less interest than a variable rate loan. Predicting when the interest rate cycle has bottomed, however, can be difficult, even for economists.
- If interest rates fall you may pay more for your loan than borrowers on variable rates.
- Capped extra repayments – it might cost money to pay your loan off faster.
- If you pay off your home loan before the end of the term, there may be extra costs.
- Less Flexibility – extra repayments are limited and redraw is usually not available.
Each lender on the Channel Direct Home Loans’ panel has slightly different terms and conditions. To request an obligation free appointment Contact Channel Direct Home Loans and your Channel Direct consultant will explain the differences and help you choose the loan that most suits your needs.