Interest rate rises are upon us, and many Aussies are wondering is now a good time to fix their loan before rates increase even higher.
Several lenders have been quick to pass the cash rate increase onto clients, causing people to panic and jump on the fixed rate bandwagon to limit the impact of higher rates. However, it’s important to weigh up your options before you make the switch to a fixed loan, as it might not be the right move for you.
Why would you fix your rate?
- You have certainty on repayments.
- You’re protected against rate rises.
- You can budget better each month, knowing your repayments.
Things to consider
- Determine what switching loans will cost you in fees and how it could potentially impact your repayments.
- Fixed rate loans do come with limitations which could mean it’s not the right option for you. For example, redraw might not be available during your fixed rate term, and several fixed rate home loans don’t give you access to an offset account.
- Most lenders will charge you ‘break costs’ when you make extra repayments on a fixed-rate loan or when you repay the loan in part or full before the end of the fixed rate term.
If you are looking to sell or renovate in the near future, or if your circumstances change and you want to repay your debt, you may want to consider the cost to break a fixed rate loan.
Everyone’s situation is unique and fixing your rate is not always the right option. We know that the market can seem very overwhelming, so we are here to do the research for you. Our team can review your current lending, discuss your goals and requirements, and present some options that are right for you.
Book a rate review with us to get started.