Fixed Rate Home Loan

What is a fixed rate home loan?

When you take out a home loan, you will need to repay the amount borrowed plus the interest charged on your loan. The interest charged to your loan can be at a fixed rate or a variable rate. A fixed rate home loan means that the interest rate is locked in for a set period of time. So your monthly repayment amount will be the same each time.

How fixed rate mortgages work

When you lock in an interest rate with a fixed rate home loan, it generally remains locked for 1 to 5 years. The period of time will depend on each individual agreement, with some lenders offering up to 10 years. Once the fixed rate period ends, your lender may offer a variety of options, including:

• Moving the home loan to a variable rate
• Refixing your home loan (i.e. negotiating another fixed rate term)
• Offering a split home loan solution
• Refinancing your current home loan

If you’re coming to the end of your fixed rate period or looking to refinance your home loan, contact our friendly mortgage brokers today. Our team works with a wide range of lenders and use our extensive experience to provide you with a seamless application process.

How are fixed rates calculated?

Generally fixed interest rates tend to be higher than variable interest rates. This helps to mitigate the lender’s risk should there be a rate rise in the future. However, they are also impacted by the condition of the market at the time of your application.

If interest rates are trending high, lenders may offer slightly lower fixed rates to attract potential borrowers. On the other hand, if interest rates have been low, lenders may raise their fixed rates in anticipation of a rate rise.

Pros and Cons of fixed rate home loans

As with any home loan type, there are advantages and disadvantages to consider. Understanding the pros and cons of a fixed home loan can help guide you to make the right decision for you.

Every home loan type will have their own varying number of pros and cons. Rather than focusing on how many there are, it’s important to evaluate how each pro and con will affect your individual situation. A mortgage broker, like our experienced team at Oceania Finance, can help you evaluate the pros and cons of each home loan to determine which option is best for you.

Which fixed rate mortgage is best?

Deciding which fixed rate mortgage is best for you will depend on your own individual circumstances and the rates and terms of each lender. However, when choosing between home loan options, regardless of whether they’re fixed or variable, it’s important to pay attention to the below.

Comparison rates

It’s easy to focus solely on advertised home loan interest rates when shopping around for a home loan. However, it’s important to also take note of the comparison rate.

A comparison rate assists borrowers in identifying the true cost of the home loan by combining the interest rate and any fees or charges associated with the loan. Every lender must display the comparison rate alongside their advertised interest rate. While advertised interest rates are important, comparing comparison rates will help you determine which lender is truly offering the best deal.

Features and benefits

Home loans will often come with benefits and features that could have a positive impact on your finances and the speed at which you repay your loan. When investigating home loans, ensure you consider which features are important to you and if these are offered by the lender.

Potential features and benefits can include:

• Offset accounts
• Redraw facilities
• Extra repayment facilities

If you’re struggling to decide which features and benefits are important, consulting a mortgage broker can help. Mortgage brokers, like our team at Oceania Finance, can review your individual circumstances to find a tailored solution for you.

Fees and costs

Every home loan will come with fees, including:

• application fees,
• lenders mortgage insurance (LMI),
• monthly or annual fees
• and break costs.

When looking into which home loan suits you best, ensure you take note of any fees that are included. Doing this will give you the true cost of the home loan.

Our experienced mortgage brokers are here to help

Comparing interest rates, negotiating terms, and contacting lenders can be daunting and stressful. That’s why our dedicated mortgage brokers at Oceania Finance are here to help. We offer:

• Experienced and friendly mortgage brokers
• Access to a wide range of lenders
• Flexible appointment times, including after hours appointments
• A comprehensive service including reviewing existing portfolios to make personalised recommendations and improve structures, rates, and fees.

Contact us today to begin your home loan journey.