Fixed Loans
Fixed Loans
Fixed home loans are a common type of mortgage in Australia. With a fixed home loan, the interest rate remains unchanged for a specified period, typically between 1 to 5 years. This offers borrowers stability and predictability in their repayments, as the interest rate won’t fluctuate with changes in the market or official cash rate set by the Reserve Bank of Australia.
Frequently Asked Questions (FAQs) about Fixed Home Loans
What are the features of fixed home loans?
  • Rate Certainty Borrowers enjoy a fixed interest rate for the agreed-upon term.
  • Predictable Repayments Monthly repayments remain consistent, making budgeting easier.
  • Protection from Rate Increases If market rates rise, borrowers are shielded from higher repayments.
What types of fixed home loans are available?
  • Fixed Term A loan with a fixed interest rate for a specified period, usually 1 to 5 years.
  • Split Loan Combines a fixed rate portion with a variable rate portion for flexibility.
How are fixed loan rates determined?
Fixed loan rates are based on the lender’s assessment of future interest rate movements, market conditions, and funding costs.
Are there any fees associated with fixed home loans?
Fees vary by lender but may include application fees, ongoing fees, and break fees if the loan is paid off early.
What are the disadvantages of fixed home loans?
  • Lack of Flexibility Limited ability to make extra repayments or access redraw facilities.
  • Rate Rigidity If market rates drop, borrowers may miss out on potential savings.
  • Break Costs Exiting a fixed loan before the term can result in break fees.