What Is Better: Fixed or Variable Rates?
Before picking between fixed and variable interest rates for your home loan, it’s important to understand them. Some home buyers benefit from the fixed version. Others can handle the changes attached to variable rates.
Mortgage House provides a brief overview to help you pick fixed or variable rates. Home loan fixed interest rates remain the same throughout the life of the mortgage. The repayment remains predictable for the homeowner. Thus it helps them plan their finances accordingly.
Variable interest rate loans on the other hand see changes. Rates change quarterly. In some cases, the Australian Reserve Bank alters them monthly. If they see that the economy is struggling or overheated, they make changes against the cash rate.
In the beginning, a variable rate home loan sees lower monthly repayments than its fixed-rate counterpart. Thereafter, the loan is subject to market conditions. At the end of 30 years, a fixed-rate loan and variable one can break even.
The decision depends on the homebuyer’s circumstances. When rates drop, they benefit from the slight savings compared to their previous repayment amount. However, if rates rise, it goes against them.
Mortgage House provides tools to counteract the rise in rates when they occur. It’s possible to toggle between fixed rates and variable rates. It’s also possible to offset a portion of the interest rate charge.
For more information, speak with our loan specialists. Rates impact car loans too so we offer our car loan calculator.
Fixed or Variable Rates
In some cases, picking fixed or variable rates provides the same result. Tools exist to help homeowners with a variable rate home loan offset some of the charges. Contact our Mortgage House loan specialists to discuss your options.