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FIXED vs. VARIABLE Rates
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FIXED vs. VARIABLE rates
With the Reserve Bank announcing a .25% increase in the cash rates, and banks putting up their variable interest rates by as much as .45% are you better off fixing your home loan interest rate?
Consider the following points?
1) What is your current variable rate?
2) What is the 1, 3 and 5 year fixed rate with your lender?
3) What loan features do you really need?
4) Do you need predictable repayments?
5) Do you anticipate any major changes to your family arrangements, jobs or business?
6) Do you believe that rates will raise in the near future?
Both variable and fixed rates have benefits and shortcomings.
- A fixed fate gives you security but a variable rate can add flexibility and cut your costs
- Variable rate are a lot more flexible than fixed rates with features such as the option to make extra repayments at any time and also redraw
- Fixed rates do no offer redraw during the fixed rate period
- Variable rate loan repayment amounts are not predictable, whereas fixed rate loan are
- If you want to get out of a fixed rate term, the costs are usually fairly significant
Lewis House Finance
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