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There are some really attractive fixed rate loans out there at the moment and some of them are even below the discounted variable rates of many lenders. So, it begs the question, is now a good time to fix

Variable vs. Fixed Rate Loan

There are some really attractive fixed rate loans out there at the moment and some of them are even below the discounted variable rates of many lenders. So, it begs the question, is now a good time to fix? With most loans you have that option. So should you have a fixed rate on your loan?

Well it does bear thinking about because the majority of Australians really like a mortgage with the variable rate, that may be because what they want is a home, we don’t actually want a mortgage, we want to pay our mortgage off as quickly as possible. 

It’s the variable rate product that allows us to do it. With a fixed rate loan there is very little functionality, sometimes none at all that allows you to pay extra.  Now a good compromise is to fix a portion of your loan and keep the other amount variable so you can pay extra off your home loan whilst at the same time having an amount as a fixed rate loan, and with that you can confidently know what the repayments will be over the long term.

One other point to keep in mind about fixed interest rates is about fixed rate break costs.  When lenders lock in interest rates, they lock in the investment. They want a guaranteed rate of return so you do need to be careful if the rates move and you look to break your fixed rate term.

Depending how the market swings, this can sometimes amount to thousands and thousands of dollars, so you do need to be considering that you’re going to have this mortgage for a long time, for at least the length of the fixed term rate period if you’re going to consider having a fixed rate loan.