FIXED VS VARIABLE LOANS

Fixed rates are often slightly lower than variable rates and this makes them an attractive option for many consumers.  However, there are significant structural differences between fixed and variable rate loans that are important to consider when making a decision about what is going to be most suitable for your mortgage. 

 

Fixed rates are associated with more limitations so it is important that your mortgage broker understands your plans and goals to determine whether fixing your rate is appropriate.  There is also the option to have a split loan, with both fixed and variable portions, if you want both surety and flexibility.

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Note the above table represents the differences in general terms as there are always exceptions (e.g. lenders who offer offset account against a fixed rate).

The other thing to be aware of is the need to re-negotiate a fixed rate loan at the end of the fixed period, to either another fixed period or discounted variable rate.  Generally the revert variable rate is not discounted and can mean you end up paying more interest if you don't realise this and proactively contact your lender (which I do on your behalf as part of my service). 

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To further discuss the differences between fixed and variable rates and determine what might be most suitable for your situation please get in touch.