Lock it in, Eddie. The Benefits of a Fixed Rate Home Loan


If you’re in the market for a home loan, one of the biggest decisions you will face is whether you should take out a fixed or variable rate loan. With uncertainty about interest rates lingering, it’s unsurprising that many have opted for the security of a fixed rate home loan. If you’re wondering if a fixed rate home loan is right for you, look no further. Below we’ve outlined all you need to know.


What is a fixed home loan?


With a fixed rate home loan, the rate of interest charged does not change for the duration of the agreed term. You effectively ‘lock in’ your loan repayments for a certain period of time. At the end of this agreed fixed interest period, the loan will revert to a standard variable interest rate.


What are the benefits?


It takes the worry out of rate hikes: if you’re concerned that interest rates may rise in the next few years, a fixed rate home loan provides greater certainty and peace of mind.


Allows you to budget: knowing exactly what your future repayments will be means you can confidently budget for other expenses.


Additional repayments: unlike most other lenders, our Fixed Rate Premium Package Home Loans allow Members to make additional repayments (however an early repayment adjustment fee applies if the loan is repaid in full during the fixed rate period).


Are there any disadvantages?


You’ll miss out on interest rate drops: if you think that interest rates have further to fall, a fixed rate may mean that you miss out on any potential savings if rates do drop further.


You’re locked in: you will need to see out the term of the loan, which means you can’t change to a variable rate if you change your mind.


What if I can’t decide?


If you are unsure whether to go with a variable or fixed rate loan, then a split loan is something to consider. This lets you structure your loan to effectively hedge your bets on future interest rate movements. This means you can secure a portion of your loan at a fixed rate, whilst keeping the remaining portion variable.


Ultimately, the decision is up to you. But make sure you do your research to work out what home loan works with both your lifestyle and your budget.


Gateway has a range of home loans to suit your needs. If you’d like to learn more call 1300 302 474 (Monday – Friday, 8am – 6pm, AEST) to speak with a Gateway lending specialist today, or view all our home loan options.