April 24, 2018 by Samantha Korzeniewski
A lot of people are unclear on what the differences are between the both. So here it is without the "polished" 'Financial Professional' terms that, let's face it, the everyday home owner or prospect really don't need to hear.
Fixed Rate
PRO's - It will offer you security with your repayments as they won't rise (or decrease) when the interest rates move with your lender. Meaning you know what your home loan expense is for every repayment, no surprises.
CON's - Usually (depending on the lender and product) the loan itself has less flexibility. For example: You may not be offered an offset account that sits alongside your loan, there may be no cashback/redraw, and you may be restricted with additional payments without penalties.
Variable
PRO's - Once again depending on the product, variable generally gives a lot more flexibility offereing offset accounts, cashback/redraw facility, and extra repayments so you can pay down your loan as quickly as you would like without penalty.
CON's - Lacks in security as your interest rate will move with the market as the lender see's fit, meaning your repayments can increase if there is a rate rise.
There really is no right or wrong choice to make, it all depends on what you are looking for in a loan.
Deslie chats about Fixed V Variable interest rates in her latest video, watch it here Deslie Chat - Fixed V's Variable
OR come in and have a chat, contact us to make an appointment now
07 5549 0800 | deslie.taylor@mortgagechoice.com.au | book online now
