Looking to change your interest rate from variable to fixed?
When interest rates are at historic lows, it’s great time to lock your rate in and enjoy the savings.
Have the Certainty of Fixed Repayments,
Even if Rates Rise
Low introductory rates are available!
- Get up to 0.20% off the rate with a professional package
- Incredible features and flexibility with an introductory rate
- Which bank has the lowest 15 year fixed rates?
Get up to
off of your next home loan
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WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Should I fix for 15 years?
Did you know that a 15 year fixed rate is the longest term fixed rate available for normal loans in Australia?
Fixing for such a long term has benefits and drawbacks that need to be investigated in full before you apply for your loan. Why do most people fix their rate?
- Peace of mind: History has shown us that financial meltdowns can happen with very little warning, often leaving those that are not prepared in precarious situations.
- Borrowing capacity: High net worth investors or those on a fixed income may be unable to make the repayments on their loans if rates increase. By fixing the rate you can often increase the amount that you can borrow as most banks consider you to be a lower risk.
- Saving money: By fixing when rates are low some people try to beat the market and lock in the “good times”. Of course to do this effectively you need to have a good understanding of the financial markets and the likely future of interest rates.
Please call us on 1300 889 743 or enquire online to get a quote from one of our mortgage brokers.
How flexible is a fixed rate loan?
Fixed rate loans are not as flexible as variable loans. A typical fixed rate loan will have limitations on the amount of extra repayments you can make each year and may not have additional features such as a redraw facility or offset account.
Some lenders have fixed rate loans that do offer these features but they do not offer fixed rates for such a long term.
Read on to find out how you can get the best of both worlds.
How should I structure my loan to plan for the future?
When fixing for such a long time you need to estimate the likelihood that you will repay the loan during the fixed term and also the amount of extra repayments you will make.
Selling the property: If you sell the property during the 15 year fixed rate term then the bank can charge you the economic cost to them in lost interest. What does this mean in plain English? The bank may charge you an exit fee known as a “:break fee” which can easily add up to be many tens of thousands of dollars. If you are planning to sell your property or refinance your loan then do not fix for 15 years.
Split your loan so that you can make extra repayments: Over the next fifteen years there is a high chance that you will want to make regular extra repayments on your loan or will receive a large sum of money that you may want use to pay off your mortgage. If your loan if 100% fixed then you may not be allowed to make these extra repayments. By fixing between 50% and 80% of your loan and leaving the rest of your loan with a variable rate, you give yourself the best of both worlds. You will be protected from rate increases but at the same time can make additional repayments on the variable portion.
Rate lock: Some banks will allow you to lock in the rate on your loan at the time that you apply for the loan. This protects you in the event that the bank changes their fixed rates between when you apply for the loan and when the loan is advanced (known as settlement). If rates are increasing or there is economic volatility then the small $300 – $400 fee is almost certainly worth the the extra protection.
Which bank has the lowest fixed rates?
This question isn’t as simple as it first appears!
Banks constantly adjust their fixed rates to match their wholesale funding costs on the money market. 15 year rates tend to be far more stable than 1 year, 3 year or 5 year fixed rates that tend to move up and down in response to short term movements in the money market.
The number one bank for your fixed rate loan will vary depending on if your loan is a low doc or not, the amount you borrow and if you qualify for a professional package.
Call us on 1300 889 743 or enquire online and we will find out which lender is best for your situation.
Can the lender change my rate even if it is fixed?
As a general rule, the lender cannot change your rate if it is fixed. Lenders have the right to alter a variable rate at any time, even if the reserve bank hasn’t changed interest rates. However this is not true for fixed rate loans.
Please refer to your loan contact for the specific details of your loan as it may vary between different lenders and loan types.
What happens to my fixed rate if my lender goes bankrupt?
If your lender goes bankrupt then as a general rule your fixed rate will not be altered. If your loan contract allows your lender to change the interest rate then there is a possibility that the new lender that takes over your loan will vary your fixed rate.
Many people prefer to fix if they are using a non-conforming lender or smaller non-bank lender that has a higher chance of going bankrupt than a major bank. This gives them extra protection in case the events of the sub prime crisis are repeated.
How do I apply for a fixed rate home loan?
Please call us on 1300 889 743 or enquire online and we will go through your situation in detail to find the most suitable lender and fixed rate package for you.