A fixed rate home loan is as straightforward as it sounds – the interest charged is at a fixed rate for a certain period of time, usually between one and five years. This means your repayments are going to stay the same for the fixed period, even if interest rates rise. At the end of your fixed term, you can either reset the period of time with a renegotiated fixed rate, switch over to a Variable Rate Home Loan or refinance your loan with another lender.
- Your repayments will stay the same, even if interest rates go up.
- It is easier to manage your budget, as you know your repayments will stay the same for the fixed period.
- Your repayments will stay the same, even if interest rates go down.
- You may be charged if you wish to make additional payments on your loan and these additional payments may not be accessible to redraw during the fixed period.
- There may be penalties if you need to exit the loan before the end of the fixed period.