Fixed rate loans are priced accordingly to a pre-determined interest rate, which is independent of fluctuations in the official cash rate. Borrowers can fix their entire loan for a period of between one five years, or you can fix a certain portion and leave the rest variable. When the term expires, the fixed portion will generally revert to the prevailing variable interest rate.
Positives of the Fixed Rate Loan
Those worried about interest rate rises in the next few years; the option can be to lock in an interest rate and by fixing a portion of your loan, this becomes as an insurance policy against rising payments should rates interest rates rise.
In realization, fixed loans are fantastic for those on stringent budget, whom want to know exactly what their monthly repayments will be to the nearest dollar. By fixing a portion of your loan, you can retain some power and flexibility in choosing how you repay your loan.
- Suitable for anyone who is concerned that interest rates may rise in the near term.
- Loan can be split into fixed and variable portions, with each having a different loan structure and part line of credit.
- You can choose both amount you wish to fix, and a time period of up to five years for this to occur.
