Fixed Rate Loans

The interest rate is fixed for a certain period, usually the first one to five years of the loan. This means your regular repayments stay the same regardless of changes in interest rates. At the end of the fixed period you can decide whether to fix the rate again, at whatever rate lenders are offering, or move to a variable loan.
 
Some home loans have fixed terms of up to 12 years. After the fixed term, the loan usually reverts to the standard variable rate on offer at that time, or you may choose to refix the loan for another term.

A fixed interest rate loan should be considered if the following apply to you:
  • You are on a tight budget and need certainty of the repayment amount each month
  • You are an investor looking to achieve a fixed return on your investment
  • You believe interest rates may rise significantly the future

Pros:
  • Your regular repayments are unaffected by increases in interest rates
  • You can manage your household budget better during the fixed period, knowing exactly how much is needed to repay your home loan
Cons:
  • If interest rates go down, you don’t benefit from the decrease. Your regular repayments stay the same
  • You can end up paying more than someone with a variable loan if the rates remain higher under your agreed fixed rate for a prolonged period.
  • There is very limited opportunity for additional repayments during the fixed rate period
  • You may be penalised financially if you exit the loan before the end of the fixed rate period
  
  

Guarantor Loan 
Fixed Rate Loans

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