One of the biggest steps in establishing a home loan is whether or not to sign up for a fixed rate or variable rate. At first, a variable interest rate appears to be slightly more beneficial whenever interest rates go down, however, there is always less security.

On the other hand, locking in a fixed interest rate home loan gives you peace of mind and has the potential to save you thousands if rates go up!

 

Budgeting, planning and saving: all three are essential if you want to pay off your loan sooner. Fixed interest rates give you the chance to plan out your expenses down to the dollar for years to come. This is because by choosing a fixed interest rate you know exactly what each repayment will be, whether this is monthly or fortnightly and you have that certainty that your repayment won’t suddenly increase because of interest rates that month.

The downside with variable interest rates is that you will more than likely be making different payment amounts each month as rates change. Fixed rate home loans mean you have the opportunity to plan out your finances for the months and years to come.

By doing this you end up saving yourself money since you’re able to budget accurately without waiting for the news that rates are going up. You will be able to set aside extra cash from your savings to put into extra repayments.

So, if you’re weighing up your options when it comes to fixed versus variable loans there are a number of things to consider. Whilst opting for a variable rate seems like it will save you money, consider what would happen if a few years down the track interest rates skyrocket and you’re left struggling to make repayments?

With a fixed rate it might seem a little more expensive in comparison to variable rates, but just remember you are paying for peace of mind and the assurance of stability. If interest rates are low at the moment, but house prices are a bit steep in Rockingham, you could really benefit from a fixed interest rate. If you’re at all unsure about what option is best for you remember to consult a professional and do your own research to help you make the right decision. We can help with that.