Set Interest Pre-Fixed Home Loans

The fixed rate home loan offers you a set interest rate for a pre-determined amount of time. Normally the length of time ranges from one to five years.

Buyers who appreciate certainty, as well as those on stringent budgets and first-time home buyers, are most likely to choose a fixed rate home loan.

You may have heard about the many benefits of variable rate loans. However, if you yearn for certainty for the funds you wish to borrow, a fixed rate home loan may be the best option for you.

When it comes to borrowing money from banks or any organisation, one of the most significant factors that affect the decision of the customer is the interest rate. Customers want lower interest rates, and many also prefer fixed rates over variable ones.

With a fixed interest rate, you lock in a specific rate for a period, which is typically anywhere from one to five years. During this period, the interest rate will not increase. Of course, it will not decrease either.

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Why Go for a Fixed Rate Home Loan?

The most significant benefit of a fixed-rate loan is that there is a certainty. While it may be true that your rate is higher than a variable rate loan, but you already know how much your repayment will be. You can then budget accordingly, which also leads to some peace of mind for many potential homeowners and investors as well.

Fixed interest rates are typically higher than loans with a variable rate. However, it does not mean you cannot find an offer that is as competitive as those with variable rates. Since it is fixed, it has less flexibility. Many loan offers with a fixed interest rate will not allow extra repayments. Always make sure that you read the fine print. Nevertheless, you can always switch to another loan once the fixed-rate period is over.

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Is a Fixed Rate Home Loan for You?

If you are a borrower who values certainty and flexibility does not matter a lot to you, a fixed rate home loan may be the right type of loan for you. However, if you think that you can make extra repayments to settle the loan quickly, along with mortgage features, a variable rate home loan may be worth considering instead.

Make sure that you weigh the pros and cons of a fixed rate home loan. When you are ready to apply, contact Quantum Finance for more information.

Pros of Choosing a Fixed Rate Loan

With a fixed-rate home loan, you can enjoy the following benefits:

  • Repayments are certain - For many people, certainty can equate to peace of mind. You do not have to worry about the interest rate going up the next month because it will not change. When you know how much you will pay from month to month, you can effectively save money and budget for the upcoming repayment schedules.
  • A fixed-rate loan offers security - Since the loan’s interest will not change, you are protected from increases that can put a dent on your financials. You know how much you will pay next month. It is easy to allot a certain portion of your budget to these repayments.
  • The loan terms are flexible - A fixed-rate home loan is available for you no matter what your needs may be. A variety of terms will help you choose the right loan for your situation.
  • You can find low rate offers - Although variable rates are attractive for most borrowers, fixed-rate loans are becoming more and more competitive. Low-interest rates make them suitable, even for first-time homebuyers and investors. In some cases, a fixed-rate loan can even have the same interest as a variable rate loan.

Cons of Choosing a Fixed Rate Loan

  • Compared to variable-rate loans, a fixed rate home loan is not as feature-rich. For instance, you cannot easily find this type of loan that comes with redraw facilities or even a 100% offset account.
  • Another disadvantage is that you may have to pay a break fee if you decide to finish your loan before the specified term. It can cost you a few hundred dollars, which is why you should read the fine print before proceeding. The remaining time on your term, as well as the rate locked in for your loan and the rate of your secured funds, will be considered.
  • Just like the interest rate is the biggest benefit of a fixed-rate loan, it can also get you at a disadvantage. When the RBA reduces the cash rate, you will find yourself paying a higher rate than the variable rate loans on the market.

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