Fixed rate home loans
Get the best deal
There are three secrets to making sure you get the best deal on your fixed rate loan.
Unlike variable loans, fixed interest loans need to be carefully chosen because you are committed to that lender for the fixed rate period.
Here’s what you need to take into account when choosing your loan.
Knowing when to fix
Choosing the right loan is a great start but what is the point if you lock yourself in when rates are high only to see the reserve bank cut interest rates?
By fixing when the economy is running smoothly and interest rates are cheap you will protect yourself from credit crises and volatility.
Unfortunately, most Australians fix when rates are high because they fear that rates are going to go higher!
This is not out of a rational decision to look at the overall term of the loan or what rates are likely to average over that entire period.
Remember, 3 or 5 years is a very long time!
Choosing the right lender
Many people just go straight to their bank and try to negotiate the best rate they can.
Unfortunately this strategy is flawed because, unlike variable rates, the major banks and other lenders have completely different fixed rates!
Why is there so much variation? Because each lender has their own opinion about the likely direction of interest rates in the future and so price their loans with different rates.
By using a mortgage broker you can be sure you’ll get the absolute best deal available on the market!
Knowing if you should even fix at all
Of those who apply for a fixed rate loan, many of them would be better off with a variable rate.
Why is it that some people are better off with variable rates?
Well, fixed rates tend to have high exit fees called (break fees) or do not allow you to make large additional repayments.
A fixed loan is like a fixed contract: if you break it then it is going to cost you a small fortune!
Do not fix your rate if you are planning to:
- Sell your property,
- Make a large lump sum repayment,
- Refinance your home loan,
Flexible fixed rates (splitting the loan to be half fixed and half variable) may help if you are planning to make extra repayments but this will not help if you are selling or refinancing as you would still incur large exit fees.
Finding the cheapest fixed rate loan in the market
Solution Home Loans brokers have specialised software that can quickly find and compare the cheapest fixed rate mortgages.
Enquire online today and one of our brokers will get in contact with you to complete a needs analysis, work out which lenders you qualify with and give you several options to choose from.
Will interest rates go up or down?
You may notice that the media is constantly reporting that interest rates are either going to shoot into the stratosphere or plummet down to record lows.
They regularly ask economists to make a predictions on interest rates because these articles grab the attention of most Australians.
The truth is that nobody knows what will happen with interest rates in the future, not even the Reserve Bank.
In the past, we have seen many predictions on interest rates which have turned out to be incorrect.
If you choose to fix your interest rate, then please base your decision on sound economic logic or on your own personal preferences, not media reports!
Please keep in mind that if you fix your home loan and then interest rates drop, you cannot switch back to a variable rate without paying a large exit fee.
Interest in advance home loans
Want to get some great tax deductions this financial year?
Pre-pay your interest in advance on a fixed rate loan!
We know lenders that have the most competitive interest rates and can offer you professional discounts as well.
This loan type is suitable for property investors and those refinancing.
Getting independent fixed rate advice
At Solution Home Loans, we recommend that you always keep your financial goals and priorities in mind when making a decision on your home loan and seek independent financial advice before fixing the rate on your home loan.
Contact us or enquire online if you would like a quote on a fixed rate home loan or if you would like to find out if fixed rates are suitable for your situation!