Fixed Rate Home Loans

A fixed rate home loan is a loan that is fixed at a certain rate for a period of time. Generally speaking most banks offer fixed rate home loans over 1,2,3,4 and 5 years. Some lenders offer 7,10 and 15 year fixed rate home loans. With a fixed rate home loan, generally after the fixed rate period ends, your home loan will revert to the standard variable interest rate at the time of expiry. You can re fix your home loan again, at that stage, but the bank or lender may charge a loan modification fee and the fixed rates will the the interest rates available after your current fixed rate home loan expires. The fixed interest rates maybe higher or lower at the time of expiry of your existing fixed rate home loan.

Advantages

• You have a guaranteed interest rate for the period of the fixed rate term.
• You may be able to manage your budget better knowing your repayments for the fixed rate home loan term.
• With most banks, fixed rate home loans can be packaged under a banks professional package, saving you fees, and some banks offer a cheaper fixed interest rate under their professional package.

Disadvantages

• With most fixed rate home loans you are limited how much extra you can pay off your loan during the fixed rate period.
• Fixed rate home loans can be expensive if you pay out your home loan during the fixed rate term (eg. Sell your home)
• Most fixed rate home loans don't have the ability to have an offset account.
• Most fixed rate home loans don't have the ability to redraw any extra funds you have paid into them.

General Fixed Rate Home Loan Fees

• An application fee may apply to your fixed rate home loan.
• Your fixed rate home loan may have a monthly fee.
• Rate Lock Fee - The interest rate you have on a fixed rate home loan is the rate on the settlement day of your loan. Banks offer a rate lock facility, which guarantees the interest rate on the day of application. This fee is generally paid up front, and is around 0.1% of the fixed rate loan amount to up to $750.
• If your loan is greater than 80% of the property value, you will pay a once off mortgage insurance fee.

Loan Term And Repayment Types

• Home loan terms from 5 to 30 years (Depending on the bank or lenders credit policy)
• Principle and interest repayments are available.
• Interest only repayments may be available.

If you would like some more information on fixed rate home loans, contact Perth Mortgage Broker Group, or call Troy on 0411 229 602, 7 days a week.