Borrowers can have the stability of set repayments for a specified time period with the help of fixed-interest home loans. If you are looking for fixed home loan rates in Australia, you may want to get additional features that might benefit you, such as redraw facilities, portability, or an offset account. In this blog, we’ll help you know what exactly a fixed-rate home loan is and how you can compare and choose the right fixed rate for your home loan. Let’s get started:
What is the Best Fixed Rate Home Loan?
As the name implies, a fixed interest rate home loan has an interest rate that is set for a fixed or specified time period, typically for 1-5 years. During this set time period, you need to pay a set amount of repayments. It will make it easy to budget and provide you peace of mind if the interest rate rises. Lenders or banks will have fixed interest rates for different time periods – sometimes they may have a time period of up to 10 years but most commonly, people select a time period between 1 and 3 years.
Most banks, lenders, and brokers offer the best fixed term interest rates in Australia. When you choose to apply for a fixed-interest rate home loan, the lender may offer you a rate lock. Basically, this is done to protect you from the situation when the interest rate may increase.
How to Compare Interest Rates in Australia?
Comparing fixed-interest rate home loans is an important step in the home-buying process. Fixed-interest rate loans provide the certainty of a consistent interest rate over a set period of time, which can help you budget and plan your finances. However, with so many options available, it can be difficult to determine which fixed interest rate home loan is the best fit for your individual needs. Take a look at the following points to know how to compare fixed-interest rate home loans:
- Compare Interest Rates and Loan Terms
The interest rate on a fixed interest rate home loan is fixed for a set period of time. The interest rate is likely to be higher if the loan term is longer. Therefore, it’s important to compare interest rates and loan terms to find the best deal for your needs. Look for the loan with the lowest interest rate and the loan term that works best for your budget.
- Consider Fees and Charges
Fixed-interest rate home loans often come with fees and charges, such as application fees, ongoing fees, and break fees. These fees can add up over time, so it is important to consider them when comparing loans. Look for loans with lower fees and charges to save money in the long run.
- Look for Additional Features
Some fixed-interest rate home loans come with additional features, such as offset accounts, redraw facilities, and the ability to make extra repayments without penalty. These features can be useful in helping you pay off your loan faster or manage your finances in a better way. Consider which features are important to you and look for lenders that offer them.
Star Homeloans can help you find the best-fixed interest rate on a home loan. We have a tie-up with a panel of 40+ lenders.
Is it possible to make extra repayments?
Well, there might be some restrictions that a bank may put on making extra repayments. Some home loan products don’t allow you to make extra repayments. Therefore, Star Homeloans can help you choose the product that meets all your requirements.
What will happen when a fixed-rate period ends?
When your fixed-rate period expires, your loan will automatically switch to ‘revert rate’. Revert rates are usually high. Alternatively, you can opt for refinancing, switching to a variable rate, or another fixed rate. However, you can ask Star Homeloans when your fixed-rate period ends as we have helped various clients save 1.5% or more.
It might be difficult to compare and find the right fixed-interest rate home loan, especially for those who are unfamiliar with fixed rates. Therefore, you can contact Home Star Home Loan where you can get guidance regarding what option would best match your requirements.