Fixed Rate Home Loans

Yes – you can refix your home loan throughout your term.  A few lenders do offer fixed-interest terms up to ten years at a time, but one to five years is a more common fixed rate period for most lenders. However, you’ll be subject to whatever the current fixed interest rate is at the time you lock in your fixed term.

A split rate loan is a combination of the two loan types – variable and fixed.  Your lender will usually let you decide which percentage of your loan will be fixed and variable – for example, you may choose a 50/50 split or a 40/60 split.  This will allow you to take advantage of the flexible features of a variable loan but still be partially protected if interest rates rise.  If your loan comes with ongoing fees, though, you may find these are doubled as a result of splitting your loan into two separate accounts.

Establishment and ongoing loan administration fees can mount up when you’re looking for a new home loan. Check the details of your loan carefully, because loan establishment fees can cost up to $700 and ongoing administration fees are often around $10 to $20 a month, which all add up over the life of your loan.

A loan’s comparison interest rate takes into consideration all the additional fees, charges and loan costs which aren’t reflected in a mortgage’s base interest rate.  As such, comparison rates provide a truer indication of the cost of your loan.  All lenders are required by law to state a loan’s comparison rate, which is based on a $150,000 loan taken out for 25 years.  This allows consumers to compare ‘apples with apples’ not ‘apples with oranges.

The revert rate on your loan is simply the standard variable rate it reverts to at the end of your fixed period.  This rate may not always be as favourable as the initial rate, so it’s important to be aware of potential revert costs in the lead-up to your fixed term’s conclusion.  For example, a loan’s interest rate may be fixed at 2.79% p.a. for the first year, then revert to 2.99% p.a.  In this case, 2.99% p.a. is the loan’s revert rate.

Yes – some lenders allow you to refinance to another term of a fixed interest rate when your current loan term expires, although the exact conditions will vary from lender to lender.

Yes – however, because your loan has been fixed for a set period, if you decide to sell your home during that fixed period you may be charged early exit fees to get out of the loan.  These fees can be quite substantial and are calculated based on how much fixed loan time is remaining and the initial sum borrowed.

Lenders make decisions about which loans to approve based on the level of risk they perceive the borrower poses.  Therefore, it makes sense that the lower risk you present, the lower interest rates will become available to you.  Low-risk customers tend to have a good credit score, stable employment and larger deposits. The nature of your property (such as houses, apartments, townhouses and flats) and whether you’re an owner-occupier or investor will also impact the interest rate you’re offered on your loan.