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The recent increases in interest rates have sparked many to worry about a return to the days of higher interest rates. This has understandably led to increased interest in fixed rate offers providing individuals with a sense of stability in relation to mortgage repayment.
There is no denying the benefits of a good fixed rate, however, a note of caution should be exercised before entering into a fixed rate offer. With fixed rates there are certain restrictions in that you can not make any overpayments on the fixed portion of the loan. There are also additional break costs on fixed portions which need to be considered if you are thinking of paying off the loan within the fixed period.
It is important to keep your options as flexible as possible. Your circumstances can change over the next 3 – 5 years and you may need your mortgage to change with them. Therefore, tying yourself into a long term fixed rate could be a costly decision.
One way to take advantage of the benefits offered by a fixed rate, whilst minimising the potential break costs is for you to split your loan, keeping a small portion on the variable rate and another on a fixed rate. This is just one option available to you with many more available catering for individual needs.
To speak with one of our loan consultants about fixed rate loans call us on 1300 551 695. Alternatively if you would like us to call you, please complete the enquiry form.
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