Fixed Rate Home Loans: Do you like to be peaceful by knowing when your loan repayment is? It’s very easy and simple by Fixed Rate Home Loan. With this loan you will be aware that your repayment will be the same for a fixed period of time. This is an excellent solution to prepare an accurate budget each month with the help of a fixed rate loan.

Because the repayments are fixed, it remains the same for the duration of the fixed rate period, usually between one and five years. At the end of the fixed period, you have the choice of switching to the standard variable rate or a combination of split loans.

Find when is the right time to fix the interest rate on a home loan?

Because economic conditions are beyond your control, even the best economists can’t predict with absolute certainty when interest rates will rise or fall. For this reason, many borrowers opt to fix their loan for a period of less than 3 years.

When considering a fixed rate home loan it is best to do some research on the current economic news and trends to get an idea of where rates could be heading. As a rule of thumb, you would want to fix when rates are at the bottom or near the bottom of an interest rate cycle.

Consider the following pros and cons before you decide on a fixed rate home loan:

Fixed Rate Home Loan Pros are similar standard repayments every month, steadiness – fixed repayments permit you to prepare your finances and fix to your budget, even in times of financial ambiguity, Cost – The increasing of interest rates would not modify your monthly repayment

The Disadvantages are You will be paying more loan amount than the variable interest payers if the interest rates fall, Most lending institutions limit the sum of extra repayments you can have each year, You don’t have an option to pay off the home loan before the expiry date else you will be penalized, there is no redraw facility in the fixed loans features.

Split Rate Home Loans: Want added security of a fixed rate home loan but also the flexibility of a variable rate home loan? With a Split Rate Home Loan you can have exactly that.

What makes a Split Rate Home Loan attractive for first time and existing borrowers is the ability to customise the home loan and add as many features as required. A Split Rate Home Loan can be split in many combinations, e.g. 50/50 split or 80% variable and 20% fixed provided it meets lenders policy

Know about the following pros and cons before you make a decision on a split rate home loan:

The Advantages are Future interest rate increase can be avoided by fixing portion of your loan, If the interest rates fall then by leaving a small portion of loan at a variable interest rate makes you to get benefits with low rate, and Combine multiple splits together to obtain a fully featured home loan.

The Cons of a Split Rate Home Loan are Different costs might apply to different portions of the loan e.g. fixed rate loans have a high break up cost, Limited amount of extra repayments might apply to the fixed portion of the loan, Flexibility to move to another lender might be costly due to the fixed component.

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