September 10, 2014
A fixed rate home loan will allow easier budgeting and will protect you from increasing interest rates.
This can be an advantage for people with fixed incomes or little chance of an income increase. Fixed rate loans in general either do not allow extra repayments or have limits on the amount of extra repayments you can make and they usually do not allow you to redraw. There are a couple of lenders that provide an exception to this.
Any fixed rate loan will have a break fee charged if the fixed rate term is breached for any reason such as a refinance to another lender, switching to a variable rate or sale of the property.
If selecting a fixed rate loan it would be wise to be aware of what the loan will revert to at the end of the fixed term. Find out if there is a cost involved in switching to a better loan product (with a lower variable rate) as many fixed rate loans revert to standard variable rates.