Fixed Rate Loans
When looking at loans, there are several options. One of the most popular loan options is a fixed interest rate loan, as it can save you a lot of money – especially when it comes to property loans, including residential loans and commercial property loans.
This type of loan’s key feature is that its interest doesn’t rise in response to the official cash rate as set out by the federal reserve for an agreed time period for the loan. This feature allows you to correctly calculate your future payments and allows you easily budget for a set period of time. Alternatively, a variable rate loan is often a little bit cheaper by a slightly lower interest rate however, the rate fluctuates with official interest rates.
While it’s great to think about how much easier it is to have the same interest rate for a set period of time e.g., 3, 4 or 5 years, there are a few things to think about. One factor to think about is that sometimes, extra loan repayments are not allowed if you have a fixed interest rate without having an attached fee. Often fixed rate loans may also have a break fee if you change or pay off your loan within the set period. These terms are different from variable rate loans, which usually allow you to make extra repayments at no cost, however, variable loans are the riskier option because of the potential uncertainty of monthly repayments.
Looking to take the leap with a fixed rate home loan?
Let us at Mortgage Domayne have our award-winning staff help you by removing the uncertainty and hassle.
We’re here to make it easier and get you the best rate available.