Servicing Victoria, NSW and SE QLD

Servicing Victoria, NSW and SE QLD

Seek Financial
  • Home
  • Services
    • Equipment
    • Property
    • Commercial
    • Planning
    • Development
  • Partners
  • News
  • Our Team
    • Steven Martin
    • Andrew Stewart
    • Matthew Beach
    • Bob Martin
    • Andrew Foreman
    • Andrew McIntosh
    • Matthew Martin
    • Mandy Martin
    • Joy Rollings
    • Emily Aglio
    • Toni McArthur
    • Zoe Stewart
  • Calculators
  • FAQs
  • Testimonials
  • Contact Us
Seek Financial
  • Home
  • Services
    • Equipment
    • Property
    • Commercial
    • Planning
    • Development
  • Partners
  • News
  • Our Team
    • Steven Martin
    • Andrew Stewart
    • Matthew Beach
    • Bob Martin
    • Andrew Foreman
    • Andrew McIntosh
    • Matthew Martin
    • Mandy Martin
    • Joy Rollings
    • Emily Aglio
    • Toni McArthur
    • Zoe Stewart
  • Calculators
  • FAQs
  • Testimonials
  • Contact Us
Skip to content
  • Home
  • Services
    • Equipment
    • Property
    • Commercial
    • Planning
    • Development
  • Partners
  • News
  • Our Team
    • Steven Martin
    • Andrew Stewart
    • Matthew Beach
    • Bob Martin
    • Andrew Foreman
    • Andrew McIntosh
    • Matthew Martin
    • Mandy Martin
    • Joy Rollings
    • Emily Aglio
    • Toni McArthur
    • Zoe Stewart
  • Calculators
  • FAQs
  • Testimonials
  • Contact Us

Fixed vs Variable Home Loan – Pros & Cons

Home News Fixed vs Variable Home Loan – Pros & Cons

Vicky McLoughlin May 21, 2018 No Comments

If you are looking to purchase a home or considering refinancing, one decision you’ll need to make is whether to fix your home loan or not.

It’s important to consider both options and align it with your financial goals and needs. Both options have pros & cons and below are some things to think about when deciding.

 

Fixed Rate

Advantages

  • Interest rate rises won’t impact you if they rise above your fixed rate, as you have agreed to remain on the same interest rate for the fixed term.
  • Budgeting can be much easier as you have the certainty of knowing what your home loan repayments are during the whole term that your loan is fixed. This will allow you to budget around your loan repayment commitments.
  • The above advantages are further supported by most lenders allowing you to fix your home loan for 1 to 5 years. This gives you additional flexibility when aligning your decision with your future plans.

Disadvantages

  • If the interest rate decreases below your agreed fixed rate during the fixed term, you won’t benefit from the potential extra interest savings available.
  • Most lenders have limitations on the extra repayments you can make during the fixed term and this can restrict you if you’re wishing to pay off your home loan sooner.
  • Redraw facilities are generally not available on fixed rate loans, meaning that any extra repayments you make cannot be accessed until your fixed term has ended.
  • Break fees may be payable if you change or pay off your home loan within the fixed rate period.

 

Variable Rate

Advantages

  • A variable rate loan generally comes with more features including the ability to redraw any additional repayments you’ve made. This also enables you to link an offset account to save on interest costs.
  • Usually extra repayments can be made without any penalties, this is great for when you wish to get ahead and pay off your home sooner.
  • Variable rate loans can be easier to switch if there are other products or offers available that are presenting a better deal.

Disadvantages

  • Interest rates can fluctuate both up and down. Usually any interest rate movement occurs around the same time that cash rate movements occur however, the banks can increase or decrease interest rates independently. This means you need to be prepared for changes to your interest rate and loan repayment amounts.
  • Budgeting can become more difficult as the amount of your loan repayments can increase when interest rates increase.

 

Splitting your loan – part fixed and part variable

Splitting your loan between fixed and variable allows you to take advantage of both loan types. Most lenders will allow you to split the loan and the split itself can be tailored to your specific needs.

For example, you may wish to have most of your home loan fixed therefore, you could choose to split your loan 80/20 or 90/10 as fixed/variable… the choice is yours.

 

Ultimately, there will always be risks associated with both fixed and variable home loans and the choice you make should take into account your future plans and goals.

Contact the Seek Financial team today to discuss your options.

 

Disclaimer:

The above information is general in nature. It has been prepared without taking into account your objectives, financial situation or needs.

Before acting on this information you should consider the appropriateness, having regards to your own objectives, financial situation and needs before making any decisions. Review our Privacy Policy at the bottom of the webpage for further details.

 

 

 

 

 

 

Budgets, Fixed Home Loan, Home Loans, Interest rates, Splitting Your Loan, Variable Home Loan Budgeting, cash rate movement, Fixed Rate, home loans, Interest rates, Loan Repayments, Offset Account, Pay off your home sooner, Redraw Facilities, Variable Rate
Post navigation
← Having trouble saving for a deposit?
Breaking News – June interest rate update →

Recent Posts

  • What Types of Debt Can Impact You Getting a Home Loan?
  • Why Use a Mortgage Broker?
  • How to Make the Most of the Equity in Your Home or Property
  • What is Equity in a Home?
  • Why Refinance Your Home Loan Now?

Recent Comments

    Archives

    • September 2022
    • June 2022
    • April 2022
    • September 2021
    • August 2021
    • July 2021
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • October 2016
    • August 2016
    • June 2016

    Categories

    • Alt-doc Loan
    • Announcement
    • Bad Credit
    • Budgets
    • Business Loan
    • Construction Loan
    • Credit Card debt
    • Credit Report
    • Equipment Finance
    • Finances
    • First Home
    • Fixed Home Loan
    • Home Equity
    • Home Loans
    • Insurance
    • Interest rates
    • Investments
    • Loan Comparison Calculator
    • Money Management
    • Mortgage Calculators
    • Positive Credit Reporting
    • Pre-approved Loan
    • Refinance
    • Self-Employed
    • Small Business
    • Splitting Your Loan
    • Tax Debt
    • Tax time
    • Uncategorized
    • Variable Home Loan

    Meta

    • Log in
    • Entries feed
    • Comments feed
    • WordPress.org

    Recent News

    • What Types of Debt Can Impact You Getting a Home Loan? September 27, 2022
    • Why Use a Mortgage Broker? June 22, 2022
    • How to Make the Most of the Equity in Your Home or Property April 4, 2022

    Tags

    Budget Business Finance Business Goals Buying a Home buying an investment property COVID-19 Credit Card debt Credit Report Equipment Finance Finances First Home Buyer first home loan First home loan deposit scheme First Home Owner Fixed Rate Government Incentives HomeBuilder Grant home deposit Home Equity Home Loan Home Loan Deposit home loans house deposit Interest Rate interest rate announcement Interest Rate Change Interest rates investment property LMI Mortgage Mortgage Calculator pay off your mortgage Positive Credit Reporting RBA RBA announcement RBA Interest Rate Announcement refinance saving for a home small business Small Business Solutions Small Business Support SME Tax Time Variable Home Loan Variable Rate
    Broker Logo

    We at Seek Financial contribute our efforts to helping people with an all rounded banking solution supported by a lasting relationship. Our expertise covers all types of loans including home and investment, commercial, rural and equipment finance.

    Recent News

    • What Types of Debt Can Impact You Getting a Home Loan? September 27, 2022
    • Why Use a Mortgage Broker? June 22, 2022

    Get Social with us

    • facebook Facebook
    • linkedin LinkedIn

    Our Accreditations

    mfaa

    fbaa

    afg

    Comart Pty Ltd (ABN 82 601 230 200) T/A Seek Financial | Credit Licence 389087
    • Privacy Policy | Seek AFG site
    Copyright © Seek Financial
    Top