Credit Matters

Fixed Rate Home Loans: Do you like to be peaceful by knowing when your loan repayment is? It’s very easy and simple by Fixed Rate Home Loan. With this loan you will be aware that your repayment will be the same for a fixed period of time. This is an excellent solution to prepare an accurate budget each month with the help of a fixed rate loan.

The duration of the fixed rate period is same since the repayments are fixed. The period usually will be from one to five years. You will have an option to shift to the standard variable rate or a combination of split loans at the end of the fixed period.

Find when is the right time to fix the interest rate on a home loan?

Because economic conditions are beyond your control, even the best economists can’t predict with absolute certainty when interest rates will rise or fall. For this reason, many borrowers opt to fix their loan for a period of less than 3 years.

Do investigations before you consider taking a fixed rate home loan as to know the current financial situations and trends so that it helps us to get an idea about the interest rates where they are? It’s always a thumb rule that everyone likes to fix the interest rate when they are very low and are at the bottom of the interest rate cycle.

Following all the advantages and disadvantages of the fixed rate home loan:

The Advantages are Equal repayments each month, You can plan your finances due to stable - fixed repayments and you can stick to your budget even in uncertain economic times, the interest rates don’t change for every month repayment.

Fixed Rate Home Loan Cons are Payment will be more than the borrowers on variable rates if interest rates falls, Most lending organizations limit the quantity of further repayments you can have each year, You may be penalized if you pay off your home loan previous to the fixed rate termination date and Fixed loans usually have inadequate features e.g. no redraw facility

Split Rate Home Loans:Do you need security of a fixed rated home loan and also do you need flexibility of a variable interest rate home loan? You can obtain it with a Split Rate Home Loan.

What makes a Split Rate Home Loan attractive for first time and existing borrowers is the ability to customise the home loan and add as many features as required. A Split Rate Home Loan can be split in many combinations, e.g. 50/50 split or 80% variable and 20% fixed provided it meets lenders policy

Think about the following advantages and disadvantages before you decide to take a split rate home loan:

Split Rate Home Loan Pros are setting up a part of your loan can keep you beside prospect interest rate rises, Separate part of your loan at a variable interest rate permits you to promote with a lower rate if interest rate falls, Encompass a fully featured home loan by joining several splits together.

The Cons of a Split Rate Home Loan are Different costs might apply to different portions of the loan e.g. fixed rate loans have a high break up cost, Limited amount of extra repayments might apply to the fixed portion of the loan, Flexibility to move to another lender might be costly due to the fixed component.