3 Things to Know Before Fixing Home Loan Rates

by Ranjan Khatak Director and founder of Your Finance Adviser

People are returning to property investments as the Australian economy is recovering from past climatic eruptions and a two-year-long pandemic. However, there is intense speculation that interest rates will be rising soon. When it comes to investing in home loans in Australia, borrowers must consider the loan structure. Lenders usually offer two types of home loan options, fixed and variable. It is a daunting task to choose which will be best, considering the current scenario.

However, it is worth considering CBA’s fixed home loan rates to avoid fluctuating interest rates and long-term plans. The fixed-rate loan ensures that the interest rate on the mortgage will be fixed for a certain period of time — typically between 1 to 10 years. It is ideal for people who want extra security.

However, one must know several factors (including pros and cons) before fixing the interest rate.

Fixed-Rate Is Ideal in Tight-budget

There are many financial advantages of fixing home loan rates

It provides a greater sense of financial certainty.
Borrowers can predict how much repayment they will be paying for a fixed period.
Locking interest rate means the mortgage rate will remain the same even after 5 years as it was in the first year.

Having knowledge of monthly and fortnightly repayments can help prepare the budget accordingly. A borrower can also take the help of an online home loan calculator Australia to evaluate repayment options. It significantly benefits first-time buyers and people on tight budgets to take steps into the financial market.

Limits Flexibility Options

Among various advantages, it limits borrowers’ ability to make extra repayments before time. Typically, fixed rates loans don’t allow extra repayments each year, although borrowers can pay once the period is over.

If a borrower is really concerned about repayments, he can choose the option of loan split. For instance, splitting a loan amount of $500,000 into two parts, i.e. $350,000 as fixed and leaving $150,000 as a variable. In this way, he can keep making extra repayments from the variable loan portion.

For a detailed understanding, consult the best home loan broker in the region.

Provide peace of mind

Choosing home loans with fixed rates offers borrowers peace of mind knowing their loan amount will not vary due to sudden rate hikes in the financial market. It helps borrowers to save the amount for a rainy day. It helps secure money and helps them plan for future expenses.

Key Takeaways

There are various circumstances where fixed home loans work best for the borrower, and it is advised to choose loans as per financial circumstances. It offers a strong sense of certainty even a borrower has financial instability; however, the only drawback is that it lacks freedom and choice options.

Why Choose “Your Finance Adviser”?

As a leading finance advising company, YFA offers valuable advice to its clients regarding loan selection and choosing the best lenders in Australia. It has an experienced team of home loan brokers who have been helping individuals and families to identify financial goals for the long run.

Contact Mr. Rohit Khatak, the best Home Loan Broker, Balmain, Australia, for more information about home loan rates and eligibility criteria.