Fixed Rates: Is it time to compare?
With variable rates at an all time low, is it now time to fix some or all of your loan into a fixed rate period?
Although, competition in variable rates is fierce the ability to fully understand what lenders have the best-fixed rate and the best features is a little trickier.
For example if you lock in your loan for 3 years on a fixed rate, can you make extra payments? Or can you redraw surplus funds that you have deposited into your loan? Does your lender allow a combination of variable and fixed rates and if so does it have a maximum and minimum loan portion.
What if you need to pay the loan out before the fixed rate period expires, will you incur penalty costs and what rights do you have.
One thing is for sure; variable rates are at an all time low. With inflation above the reserve banks expectations, the pressure to reduce rates further for the moment has reduced.
Know one knows, not even all the clever economists, whether we should fix our loan rate. However, if you are after peace of mind by knowing what your interest rate and loan repayment will be for a period of time – well maybe it is now time to compare what is on offer.
For comparison an average three-year fixed rate on a $300,000 loan is 5.12 percent compared to 5.51 per cent 12 months ago?
The average standard variable rate is 5.53 percent compared to 6.91 per cent one year ago.
It is difficult to know if we have reached the bottom of the interest rate curve.
However, one thing is for certain, the choices available to find a great deal has never been better.
So why not take a moment and see whether you have the best deal to save some money, protect your family against interest rate increases or just getting a better deal to pay your loan off sooner.
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