Home Loan Interest Rates

Choosing the right mortgage involves a lot more than just getting the lowest home loan interest rates.

Once you know how much you can borrow, you may want to select a home loan that gives you the best overall deal, which could mean finding both a competitive interest rate as well as the right loan features.

Ideally, when you compare mortgages, you’ll be looking not only at the home loan interest rates but also at the monthly repayments and at the loan term. This way you’ll be certain to save yourself as much as you can. To find out exactly where you stand, don’t hesitate, call one of our brokers for a free consultation today on 1300 366 287.

Fixed or Variable Interest Rates: Which is better for me?

A variable interest rate loan means that your interest rate will change with the Standard Variable Rate that's determined by the Reserve Bank of Australia ('RBA').

Key Features of a Standard Variable Loan

  • interest rate and repayments can change at any time.
  • If you have extra cash each month, you can make unlimited extra repayments that pay down the loan faster - putting you in a better position later if the interest rate increases.
  • You can redraw extra repayments.
  • An Offset Account should be available.

A Variable Interest Rate Loan can be used for the following

  1. Personal owner-occupied housing.
  2. Investment housing.
  3. Personal investment/ building and construction.
  4. Bridging loans.
  5. ‘Off the plan’ purchase loans.

A variable interest rate loan can’t be used for business purposes.

There’s generally a lot more flexibility in variable rate loans, with the option to take a repayment holiday, redraw any extra repayments, take advantage of introductory rates or increase your loan amount later in the lifetime of your loan.

A Fixed Interest Rate loan is essentially a budgeting tool that gives you the certainty of locking in the current market rate, and having the certainty of a set payment on your mortgage for the fixed period.

Key Features of a Fixed Rate Loan

  • A set repayment means you can accurately budget and plan your finances.
  • If the interest rates rise, you’ll be protected for the period of the fixed term.
  • Interest rates are usually fixed for a period of 1-5 years.
  • Extra repayments may be allowed, depending on the individual lender, but there will usually be a limit to the extra amount you can repay each year.
  • A partial interest offset account may be available.

A fixed rate home loan can’t be used for business, building or construction, bridging or ‘off-the-plan’ investment.

You won’t have as much flexibility as with a variable rate loan, but once the fixed period ends, you can once again choose to stay with the current variable rate, and enjoy greater flexibility in your loan features, or to fix the market rate for a further period.

When weighing up whether to select a fixed rate home loan or a variable rate mortgage, you must consider all of your circumstances, such as your current work situation, your current and expected income, and your personal life goals and direction.

Reasons to fix your home loan
  • If you’re not in a hurry to pay down the loan amount.
  • You’re considering having children.
  • You’re worried about managing if interest rates rise.
When to stick with A variable rate
  • If you think your salary might significantly increase soon.
  • Your objective is to repay the loan as fast as possible.
  • You’re looking to sell the property in the near future.

Want the Best of Both Worlds?

You can consider a split-rate loan. This means that you fix one portion of the loan amount, whilst leaving one portion at the variable rate.

With a split rate home loan you have more stability by having a portion of your loan that is not exposed to fluctuating interest rates. You’ll also still benefit from the ability to make extra repayments on the variable portion of the loan, a redraw facility, and an offset account.

This enables you to experience the effect of changing interest rates on your repayment amount, and on your income and lifestyle, and to make extra repayments when the rates are low or you have extra cash.

If you’re considering purchasing a property or wondering if you can get a better deal on your current mortgage, don’t hesitate to book a consultation with one of our specialists today. They’ll be able to assess your personal situation and advise on what your options are. Call 1300 366 287 now and find out how much you could be saving!

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