Mortgage Loan Interest Rates – Go Fixed or Variable?
With interest rates rising in recent months there has been plenty of debate about what type of home loan is best in today’s market. It is very important to research the type of home loan that will best suit you in the same way that you spend lots of time searching for the right property to buy.
For those on a tight budget and who want the certainty of knowing what their repayments are going to be over the next few years, a fixed interest rate may be the better option. A fixed rate assists borrowers who are not in a position to make extra repayments and who are not planning to pay out their loan during the fixed term.
However, fixed interest rates don’t suit all borrowers and can be risky if you are committing to a longer term of three to five years, as you cannot predict what direction interest rates may take during this period.
A good alternative may be to organise a split loan, where you can fix part of your loan and keep the rest on a variable rate. This way if variable interest rates go down, you can still get the benefits.
If you already have a home loan but are considering switching lenders, make sure you weigh up the costs of switching with what you might save in interest. The fees and charges associated with switching vary and can overshadow any savings.
In any event, it is best to talk about your finance options with a qualified mortgage broker or financial professional.