Fixed or Variable Interest Rates?
All financiers will give you the option to either fix the interest rate on your loans or leave as variable.
Advantages of fixing rates
- Gives protection to borrowing costs in the event interest rates rise.
- Known and fixed costs for term of borrowing.
Disadvantages of fixing rates
- Fixed rates are set with a built in margin for future rate rises.
- You can not take advantage of any falls in interest rates.
- Penalties may apply in the event you wish to make extra repayments or clear loans.
Which way to go?
- This will depend on your personal view of forward interest rates.
- Take an each way bet and split your borrowing needs between fixed rate and variable loans.
This is a complex area and with our assistance we can request financiers to structure facilities to best suit your own personal requirements.
To see the latest news on the interest rate outlook visit the Reserve Bank Australia website.
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