5 minute Read
5 minute Read
Considering the recent interest rate hikes, more than ever, it’s important to consider all options to avoid paying more on your mortgage.
Following the RBA’s 50-basis-point hike in the cash rate on 7 June 2022, it is no surprise that many banks increased their rates as well. Australia’s big four already announced that they would pass on the full value of the rate hike to customers.
The cash rate hike increases your loan rates – unless you do something and shop around to see if there’s a better rate. If consumers do nothing, you might succumb to ‘mortgage stress’ if you do not know your loan options.
In line with these events, many people are looking into fixed and variable rates to somehow ease the financial burden.
Understanding the advantages and disadvantages of fixed and variable rates will help you make well-informed decisions that may help you save more money than you think.
A fixed-rate loan stays constant at an agreed rate for a predetermined period. Because the rate is fixed, the loan repayments do not fluctuate.
This can usually span from one to five years. After the fixed term, you can agree on another fixed rate, or the rate will revert to the standard variable rate.
On the other hand, a variable-rate loan can vary at any given time at the lender’s discretion. The rates depend on several factors, such as the RBA’s official cash rate and competitors’ rates.
Therefore, the floating nature of the rate means that the monthly repayments can fluctuate as the rate changes.
To get the best of both worlds, splitting your loan into a fixed portion and a variable portion is an option. This gives you the flexibility to make extra repayments while managing some of the risks present in an interest rate hike.
There are no rules on how much you can allocate to the fixed portion and the variable portion. In this case, you are free to split the loan however you deem appropriate once you consider your goals.
Talk to our brokers for free to help you better assess your options and find out which one works for you. This will help you make more informed decisions that best suit your needs and circumstances.
You may also qualify for a better rate and cashback offers that you are unaware of. We work with over 40 lenders and banks, so we may have better deals and options, which could save you tons of money.
Keep an eye out for our upcoming blogs on schemes and rebates! Get in touch with us at firstname.lastname@example.org if you have any questions or concerns.
Considering the recent interest rate hikes, more than ever, it’s important to consider all options to avoid paying more on your mortgage. Following the RBA’s 50-basis-point hike in the cash rate on 7 June 2022, it is no surprise that many banks increased their rates as well. Australia’s big four already announced that they would […]
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