A Fixed interest rate home loan is usually taken out for an
agreed period of time between 1 and 10 years and when this ends you have the
choice of fixing the rate again or switching to a variable interest rate.
Advantages
Budgeting your finances is easier, as your home loan repayments remain constant
even if there is an interest rate increase
Reduce the risk of defaulting on your home loan when variable interest rate
increases and repayments increase
Additional home loan repayments are allowed of up to 5% in a 12 month period
Disadvantages
The fixed home loan interest rate is normally higher than the variable home
loan interest rate
If interest rates fall, the home loan repayment will not reduce as your
repayment amount is fixed
Fees may apply if additional home loan repayments of more than 5% are made in a
12 month period.