July 25, 2014
You may have seen the headlines… Three lenders have just announced significant reductions to their five year fixed rates, to history making lows of 4.99% pa.
Fixed rate loans can provide a great deal of certainty for your household cash flow and budgeting. It’s the perfect ‘set and forget’ type of arrangement. If that’s important to you – then a fixed rate might be a great solution.
However, there are generally some restrictions attached to fixed rate loans that you should be aware of, so that you can make an informed decision.
If you need to break a fixed rate loan, you may face some large unexpected costs. Therefore, it’s important to consider your plans for the next 3-5 years and structure your lending accordingly. For example, do you intend to sell your property?
You may be restricted in the amount of extra repayments you make to your home loan. If you’re currently paying above the minimum amount required by your lender, it would be wise to consider if these can continue with a fixed rate loan.
Extra repayments, normally available through a redraw facility, may also be locked away until the end of your fixed rate term. This could be a great strategy to build some savings that you can’t touch :)
If you are currently saving interest through the use of an offset account, this may not be available to you with a fixed rate loan.
Everyone’s situation is unique, so there’s not a ‘one size fits all’ solution out there. Depending upon your responses and reactions to the above, you may find that a fixed rate, variable rate or a combination of both is the best fit for you.
Mortgage Choice in Coolum Beach can help you find a tailored solution. And, because we have 28 lenders on our panel, we can offer a comprehensive review and comparison of your options.
So, call us today on 07 5473 9077 or email at any time to firstname.lastname@example.org.