Are Variable Interest Rates Right For You?

 Variable or Fixed Interest Rates?

Should you go with Variable Interest Rates in a Rate Hike Cycle?

-It's easy to get a little confused. It's not simple to work out which lender is offering the best deal, or who has the best interest rate, or what part of the rate cycle we are in.

-The main choice you need to make is whether to fix the rate or opt for a standard variable interest rate.

-Most lenders fix for 1 to 3 years.

What are the benefits of the old-fashioned variable interest rate?

1. Lower interest rate

-Variable rates are generally lower than fixed rates. If you choose to fix your rate, you're paying for the certainty that this offers.

2. Take advantage of decreasing cash rate

-If your lender reduces their standard variable interest rate, your interest will be reduced accordingly

3. Features and Flexibility

-Variable rate loans usually let you make additional payments and redraw the extra money if you need to.

-Some lenders also allow offset accounts, which reduces the overall interest charged on your loan.

-You can always fix your rate later.

-However, if the cash rate rises, your loan repayments will increase accordingly. Did you make the mistake of borrowing too much? If you opt for a variable rate loan, and then interest rates start to rise, you might find that you struggle to meet your repayments.

What should you do?

-It's best to speak to us first before entering into a home loan. We can run you through your options and come up with a plan that suits your lifestyle and budget.

-You won't go through to a call centre; when you ring, I'll answer personally and begin the process with you right there over the phone.

Matthew Stack - finance broker

0423 237 242

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