Is it worth fixing your home loan?

Has speculation about a rate rise this year got you wondering about whether you should fix your home loan?

A fixed rate home loan has its pros and cons, and your decision will depend on your personal preferences.

When you choose a fixed mortgage, the interest rate stays the same for a set period – generally between one and five years. At the end of the fixed term, your loan will revert to a standard variable rate unless you choose to fix it again.

The benefits of a fixed loan are:

Certainty around repayments ­A fixed mortgage gives you assurance of your regular repayments during your fixed period. This is helpful when it comes to budgeting and planning your expenses.

Protection from interest rate rises – Your repayments will stay the same during your fixed term, regardless of interest rates going up or down. It means you’re protected from the impact of higher mortgage repayments.

There are disadvantages to keep in mind:

Less flexibility – With a fixed rate, your ability to pay off your loan faster will be limited by restrictions and annual caps on additional repayments.

Break fees ­­– If you refinance your mortgage or pay it off before your fixed term ends, you’ll need to pay a break fee, which can be hefty.   

Fewer features ­ Fixed mortgages generally have fewer features, such as redraw and offset accounts.

Luckily, you aren’t forced to choose between variable or fixed. You can opt for a split loan, which allows you to fix a portion of your loan.

You can enjoy the benefit of knowing what your fixed loan repayments will be, while on the variable part, you can use an offset or redraw account or make extra repayments.

Our team can help you decide if a fixed home loan is the right choice for you. We’ll also take the guesswork out of comparing solutions. Call us today.

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1. Any financial advice is provided by Dominium Capital Financial Advisers Pty Ltd, an Authorised Representatives of Dominium Capital Pty Limited (ABN 54 513 176) 674 AFSL 461653
2. Any credit & finance advice is provided by Dominium Capital Pty Ltd. Australian Credit Licence 461653
3. General Advice Warning – The information provided is general advice only. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.