Interest rates are at a record low and there is no way of knowing how long they will remain this low. A lot of people are reviewing their home loan to take advantage of these low interest rates and fixing their home loan rate to provide certainty in the future should interest rates begin to rise. The Reserve Bank of Australia (RBA) announced in August that they would cut rates by a further 0.25% to a new low of 1.5 per cent. This makes fixing your loan a very tempting option right now to help avoid increases on your monthly mortgage repayments should interest rates rise in the future.
How can I take advantage of the record low interest rates?
When deciding whether to switch or opt for a fixed rate loan, it is important to consider all of your options to ensure you receive the most suitable loan for you. Fixing your loan comes with the benefit of knowing exactly what your loan repayments will be each month so you can more accurately budget for other lifestyle expenses or savings goals.
Limitations of fixed rates
It is important to understand that fixing your home loan interest rate does come with some limitations, so it is essential that you take the time to review your options. One of our friendly mortgage brokers can sit down with you to ask you the right questions and help determine whether a fixed rate loan is suitable for your personal situation.
In many cases, lenders do not allow extra loan repayments during the fixed rate term. Therefore, if you wish to make additional monthly repayments or a lump sum repayment during the fixed rate term, there may be significant costs associated with that.
Some lenders may allow additional repayments, so it is a good idea to speak to your mortgage broker about this first before agreeing to a fixed rate term. If you are looking to take advantage of the low interest rates, but also have the option to make higher repayments on your loan, it may be a good idea to split your loan and fix only a portion of your loan and keep the remaining at a variable interest rate. This will enable you to enjoy the benefits of both types of loans.
There is no way of knowing how long interest rates will remain this low, so if you are thinking about fixing your loan’s interest rate, get in touch with one of our friendly brokers today who will talk through your options and help you find the most suitable loan to save you time and money.