Home Loan and Mortgage Refinancing Tips From Loan Monster
It is considered as a great Australian debate, should you fix your home loan or keep it variable? Overall market statistics and Perth mortgage broker commentary lean to the opinion that 75% of the time borrowers will end up ahead with a variable rate home loan. However, there are historical times when market conditions have led to borrowers who have chosen fixed rates coming out ahead of those that chose variable.
What is a Variable Rate Home Loan?
A variable rate home loan is subject to RBA (Reserve Bank of Australia) cash rate fluctuations and the particular lenders passing on the interest rate changes to their customers by altering their Standard Variable Rates.
What is a Fixed Rate Home Loan?
Fixed rates offer the security of knowing exactly what you are paying over the term of the fixed rate. For example, once your loan has settled if your repayment is $1,479 per month it will stay $1,479 for every month until the end of the fixed period.
Advantages of Variable Loans
The advantage of variable rates is that it can offer more flexibility than fixed rates and allow borrowers to pay off their home loan quickly if they so desire to. The borrower can capitalise on market fluctuations and take advantage of any interest rate decreases. Often lenders allow the flexibility of borrowers being allowed to use offset accounts to offset the amount of interest they have to pay to the bank, hopefully allowing borrowers the chance to pay off their home loan quicker.
Advantages of a Fixed Rate
The biggest advantage of a fixed rate home loan is that it will not be subject to interest rate increases or decreases over that period, which gives the borrower certainty or repayment. The most common fixed loan periods in Australia are 2 and 3 year fixed. After the fixed term the loan then reverts to a variable loan.
Talk to a Perth Mortgage Broker
* The information contained in this website should not be taken as constituting personal advice. We recommend that you seek professional assistance before acting upon any information provided or linked on this web site
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