With the growing uncertainty of when lenders might decide to raise variable rate home loans, majority of borrowers have been opting to fix their home loans. Even though fixed rate home loans have their drawbacks, if you are looking for extra security or you are working on a strict budget and are considering a fixed rate home loan, here are some tips to help you rip maximum benefits from your fixed rate loan during its fixed term.
The rates might be catchy but if you are not committed for the long term, you may end up paying huge break costs should you decide to terminate your loan contract before the end of its period as stipulated in the loan agreement.
Though it’s rare to find, if you can, look for a lowest fixed rate home loan that has offers an offset account. This interest saving feature helps to reduce the interest rate you will pay during your loan term. If you are lucky you may find a lender who offers a 100% offset account during the fixed term period.
Another great feature you may want to consider as you shop around for a fixed rate home loan is a loan that comes with an extra repayment facility. This feature allows you to make additional repayments during the fixed term period which helps you reduce on your interest payable during the loan term.
With lots of competitive fixed rates loans in the market, opting to split your loan and fix a portion of it may prove to be beneficial in the long run. Not only do you get to enjoy the benefits of the certainty on your monthly repayments, you also get to benefit in case of future rate cuts during your fixed term period.
Whether you are fixing it for three or five year period, once the fixed term comes to an end, it is time to assess your home loan. At the end of the fixed term, your home loan would generally go back to a variable rate which may not be so competitive. Take this opportunity to talk to your lender and negotiate better terms for your home loan. To ensure you are getting the best, shop around and compare what other lenders have to offer to help you have better bargaining power.
Whether you are in the market as a first home buyer or looking to refinance, our home loan brokers are here to help you get the best deal in the market. Talk to us now at: +61 1300 874 871