Most clients I meet are familiar with the terms fixed and variable when it comes to different loan types. A variable interest rate loan is exactly that; the rate varies dependent on the lenders change of rate, usually chiefly influenced by the rates of interest issued by the Reserve Bank of Australia. A fixed rate loan again is relatively straight forward; the interest rate is fixed, and in turn so are your repayments for the pre-determined period you elect to fix your loan. The benefit of a fixed rate is that you can lock in a great deal and protect yourself against future interest rate rises. However, if your income, or situation changes, for instance if you are planning on selling your home, a variable rate is preferred as the penalties for breaking a fixed rate term can be hefty.
Each client’s situation is different. To know if a split loan or another type of facility is the right option for you, give me a call on 03 9596 3167 or 0439 062 771 for a no obligation chat about how you might pay off your loan faster.
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