Fixed Rate Home Loans

Many people who elect to take on a fixed rate home loan do so for peace of mind. By knowing your interest rate as a definite, one knows what they will be paying on their mortgage over the nominated period. This allows a person to manage their finances more precisely. Our calculators are a useful place to start to gauge your financial position when considering a home loan.

• Missing out on rate cuts: One of the biggest disadvantages is you don’t get the benefit of interest rate decreases whilst your loan is fixed. Hence a borrower can be caught paying a higher interest rate for the nominated period if rates fall.
• Break costs: Breaking a fixed rate home loan can trigger off break costs. Break costs are expensive exit fees charged when breaking a fixed rate contract.
• Restrictions: Although the interest rate is fixed, many lenders place other restrictions on fixed rate loans.

Overall, yes. Most fixed rate home loan lenders are restrictive in terms of features. Many fixed rate home loans do not offer you the ability to make excessive additional repayments. As a guide, most lenders do not allow you to make more than $5,000 – $10,000 in additional repayments in a single year on top of your minimum repayment. Many lenders also do not allow you redraw on a fixed rate loan.

There are several major lending institutions who offer flexible features with fixed rate home/investment loans. Although, most lenders are restrictive with how much extra you can pay on top of your minimum repayment, there are a handful of lenders who do not have this restriction. Hence some lenders allow you to make bulk lump sum additional repayments on a fixed rate home loan. There are also some lenders who also allow you to redraw all extra repayments made into the loan.

There are also some lenders who will offer either a partial offset or a 100% offset loan feature as part of a fixed interest rate home loan.

Most lenders offer fixed rate loans. However, there are a hand full of lenders that do not offer fixed rate loans at all, and others who do not price them well in order to not write this type of loan. There are other lenders, who might only offer 1-3 year fixed interest rates.

Not all lenders offer the same pricing modules on fixed rate loans. As a guide, whenever you compare a fixed rate home loan between various lenders, you will find that on a particular term, most lenders will have pricing within 0.1% – 0.5%. In some instances, there are times when the variance between lenders can be even higher. Knowing the term of the fixed period, one can immediately work out his savings between lenders.

Fixed interest rate home loans can be packaged up and discounted under a professional package loan. Some lenders will also offer discounts on the advertised interest rate available on the day of application. The discounts can vary depending on the loan amount.

Fixed rate home loans can also be put under a low doc loan structure. This can also be put simultaneously with a partial offset or 100% offset loan feature even under low doc!