Mortgage Choice and Channel 7's West Real Estate Program bring you another installment, with this episode discussing fixed versus variable interest rates.
This is a popular point of interest amongst our clients at the moment given the historically low interest rates, many want to review their home loan and see if changing to a fixed or variable loan will better suit their financial situation.
It is definitely beneficial to contact a Mortgage Choice Joondalup broker and review your home loan, especially if you haven't done so in a few years, this could significantly improve your loan options.
Fixed vs. Variable Loan - Which is Best?
After seeing this recent West Real Estate Program episode, I thought I would define and discuss some pros and cons of fixed and variable interest rate loans, for those who aren't sure of the difference between the two.
A fixed rate home loan usually provides predictable mortgage repayments for a period of 1-5 years (depending on your situation). This means that regardless of what is happening with interest rates, you have the security of knowing your repayments will be the same. However, some lenders won't allow you to make additional repayments and breaking your fixed rate term can be costly.
A variable rate home loan on the other hand, provides greater flexibility and more features than a fixed rate. This can be beneficial if the interest rates go down, so do your repayments. As well as, additional repayments can be made to your loan without incurring penalties. However, this option offers no certainty around what your monthly repayments will be and depending on the interest rate market this could be problematic.
Both options have their pros and cons, and the decision to choose a fixed or variable rate loan definitely depends on the individual and their financial situation. It might be in your best interest to split your loan into a fixed and variable rate loan, to get the best of both options.
Don't worry, if you missed this recent episode of Channel 7's West Real Estate Program, you can now watch it right here...
For further info on fixed and variable loans or to discuss your options, please don't hesitate to give our team a call on (08) 9485 0090.
Dennis Aplin, Your Local Mortgage Broker in Joondalup
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