Thinking about ‘Fixing’ your Home Loan Interest Rate?

We are in a falling interest rate cycle however this will not go on forever. Economists forecast reductions in rates this year by 0.5%. There are also predictions that...

... rates might rise around the end of the year.

Let’s start with what is a fixed or locked home loan interest rate? It is a Contract between you and the bank that says that you will pay the agreed interest on the amount borrowed for the agreed period of time. SIMPLE !

Try fixing your rate for 1, 2 or 3 years. Find the cheapest rate, and pay as much as you can.

Fix as low as you can for as long as you can BUT be careful to lock in at the right time. See “Piece of Gold”

Try splitting your loan and fix part, it’s like hedging your bets. It leaves you with some useful flexibility.

What Great Bummers can befall you? Penalties if you refinance or pay out your loan whilst fixed and, being unable to pay down the principle whilst fixed.

A little piece of Gold! To gain some insight as to where interest rates might go, just look at the term deposit rates for 6 months 1, 2, 3 and 5 year terms. Are they going down, up or what?

It’s NOT DEFINITIVE but it gives you some idea .

Paul GILLMORE DFS

Founder and Director

Southern Cross Financial Services

07 5429 5561

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