If you are thinking of buying a house or looking to refinance you may be considering fixing your home loan. Fixing your loan involves fixing the interest rate for a set period - often for 1, 3 or 5 years although lenders offer longer loan terms.

Here are some things to help you decide.

Benefits
• Makes budgeting easier – you know exactly what you are repaying which helps if you are on a tight budget.
• Rate rises will not affect you – if interest rates rise above your fixed rate you will not have to find extra money in your budget to pay for increased repayments.

Disadvantages
• Rate drops will be frustrating – if the interest rate drops below the fixed rate on your home loan you will be disappointed that you will not benefit from the drop.
• Often cannot make extra repayments – extra repayments are often not allowed if you have a fixed rate or the amount of extra repayments you can make may be limited before a fee is charged.
• Break fees may apply – If you want to change or pay off your loan there may be a break fee if you make these changes during the fixed period (eg. If you sell your house)

Another option is to split your loan and have a portion fixed and a portion variable. This way you manage some of the risk of interest rate rises but can still make extra repayments.

Come in or call us to discuss what is the best option for you.