Fixed rate vs variable mortgages – which one is for you?
By Advantage Property | 17th Nov 16
Fixed rate vs variable mortgages – which one is for you?
The low interest rates have been a strong incentive for people to buy and sell. Most banks are now offering attractive and competitive interest rates: so the question is, should I fix it or choose variable?
Most lenders are offering incredibly sharp fixed rates which is very appealing to most, but what many don’t know is that there is a significant cost to break free from your fixed rate.
Most people fix their home loan rates between 3-5 years and as there are many benefits to fix your rate, there are also some things you may want to consider. A break fee will be incurred for the following scenarios:
- You may want to switch to another lender or product before your fixed- rate loan term has expired
- Making additional home loan repayments in excess of the amount stipulated by your lender
- Repaying your loan in its entirety before the fixed-rate term has expired
- Any defaults on mortgage repayments
Though the fixed-rates are very attractive, keep in mind the length remaining on your mortgage as this can affect the cost of a break fee.
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