Fixed Home Loan Rates

by

Shaun McGowan

Fixed home loan rates are where the borrower’s interest rates and major interest repayments are preset for a fixed time, normally from one to 5 years, and occasionally longer. Fixed home loan rates generally slip back to the standard variable rate at the time the fixed-rate period has expired, unless ‘rolled over’ for a new fixed-rate term (at the existing fixed rates).

There are a number of reasons for taking into consideration a fixed home loan rate but fixing your home loan is a very private choice.

Cost or interest rate is undoubtedly one of those foremost reasons.

Another very common reason for choosing a fixed home loan rate is to take benefit of the assurance it will give you above your home loan repayments.

Above all if you are an investor or a first home buyer, a fixed home loan rate may be worth it for the safety it provides, apart from of the actual costs implicated. Assume it as an insurance payment.

The majority of people do not understand that variable interest rate arrangements and fixed interest rate arrangements do not come from the similar source. They are definitely related, but the drivers are totally dissimilar.

Variable rates are driven by Reserve Bank policy and individual lender costs.

Fixed rates are driven by the outlook of those who put their money out to the fixed rate wholesale market.

Fixed home loan rates advantages

— One has assurance of repayment amounts. Even if interest rates go up, the repayments on these loans stay the same as the interest rate is fixed for the time of the preset period. This allows for making financial arrangements in the future.

— For investments that are planned for the long-term and to possibly support future retirement, a regimented principal and interest lessening program over time maybe the most suitable option.

— The interest on a fixed home loan rate is by and large cheaper than those on more flexible products.

Fixed home loan rates disadvantages

— Condensed flexibility, excluding the case of a small number of fixed home loan products and/or special offers.

— If interest rates go down, the repayments will not, as the rate remains fixed.

— if you sell your property during the fixed rate period and want to clear the loan in complete, you could be up for fees, depending on where rates have moved from the time you initially predetermined your Loan.

— Added repayments are restricted, and exceeding these limits may invite costs and fees.

Shaun McGowan writes about

fixed home loans

rates. For more information visit

fixedhomeloans.com.au

Article Source:

ArticleRich.com