With all of the talk in the press and on the television about whether you should choose a fixed-rate or a variable interest rate for your next home loan, where do you turn to, for confidential information and easy explanations so that you can make the right decision?
Setting up a meeting with your mortgage brokers in Kwinana will be your first sensible decision, because they will be able to explain how they can search the entire market to find the best deals available for you. They will ask you a number of questions which will direct them towards the style of mortgage that suits you best.
For example, if you choose a long-term fixed-rate deal and then wish to pull out before the deal has completed, there may be penalties to pay so this type of deal wouldn’t suit you if you are looking to move again halfway through the fixed-rate period; or would it?
What is the Difference between a Fixed or a Variable Rate Home Loan?
With a variable rate interest loan, the interest rate that the bank charges against your mortgage debt will alter as market interest rates change. While this doesn’t mean that your interest rate or monthly repayment will change every single month, it might change three or four times in a year or it might stay the same for a couple of years. Your mortgage broker in Kwinana can explain all of this to you on more detail.
Essentially, a variable rate means that your repayments will change at unknown times.
When you acquire a fixed interest rate home loan, the interest rate charged will stay exactly the same for the entirety of the number of months or years that you have agreed with your bank or lender. If mortgage rates change in the marketplace, your rate will remain precisely the same.
This gives you the advantage of knowing accurately what you are going to pay every single month during the term of the fixed-rate loan.
Which Deal is Best?
On average, but remembering that averages don’t always count exactly for you and your circumstances, people on variable rates have found that the deal works out better for them over the long term, rather than choosing a fixed-rate mortgage.
If mortgage rates are set to increase, that’s a good time to obtain a good quality fixed-rate mortgage, because you will be setting the rate below the variable rate. Conversely, if mortgage rates fall, a variable rate may be better for you on average, if it is less than the fixed-rate you are being offered.
Keeping up with all of this information and checking every bank and every deal that is available is something you should leave to your mortgage brokers in Baldivis, because they will be able to help you reach a conclusion about which deal is best for you. They will understand if there are any exit penalties to get out of deals that you may enter into and later regret so at least you will be going forward with a full set of information and understanding the deal that you are committing to.
