Fixed Rate Home Loans

The fixed rate home loan has an interest rate and the initial and repayment periods fixed. They vary from 6 months to 15 years. Locking your repayment periods between 1-5 years has the advantage of giving you stability in the initial stages. This loan can then become variable after the expiry of the fixed period. Similarly, it is possible for you to apply for another fixed term.

The goodness of this fixed rate home loan is that it gives you redraw facility and allows you to make extra repayments. It also aids you in planning your budget because you know in advance how much you need to pay towards the mortgage. It also makes you relax because the upfront payment expenses are well known to you. Lastly you will have the advantage of making changes to your repayment schedule and terms when the interests fall.

It is important to note that the fixed rate loan has its own cons amongst them is the fact that you cannot enjoy lower interest rates in the event of reduced interest rates in the market. Also making a payment more than the fixed amount comes with an extra charge hence even if you are financially stable making extra payment may not be beneficial. This loan is also not known to have attractive features found in the standard loan. Lastly, trying to change or make alterations towards the loan terms and conditions attracts an extra charge.

The fixed rate loans are not tied to any index. They have their rates fixed in advance. They have a fixed monthly payment made at the end of every month, a thing that makes the total loan to be paid fully at the end of the term. This type of a loan is very popular to both the borrowers and the lenders.