Should I Fix my Home Loan or should I go for the Variable rate on offer.

The above question should always come under consideration when taking out a home loan. Both options have pros & cons.

Fixing – Pros

makes it easier to budget as payments are locked in for the fixed term

• takes the stress out of worrying about a rate rise
• Fixed terms can be 1 to 10 years

Cons

• Additional repayments are limited in most cases
• Break costs can be excessive.

A variable home loan is more flexible. They generally allow;

• unlimited additional payments
• redraw
• no break costs when discharging

1 option to consider is a split loan. Part Fixed and Part Variable. This gives you the best of both worlds. If rates continue to fall you receive the benefit in the variable split and you also receive all the benefits of redraw and additional payments with the variable loan. Also the split does not need to be 50/50 as any portion can be split fixed and variable.

Every applicant has a different set of circumstances. If planning to sell in the near future then fixing may not be ideal due to the break costs. But if you are happy with the fixed rate and are planning to own the property for a long term then it is worth considering.