PROTECT YOURSELF FROM RATE RISES
Many lenders in Australia generally offer fixed rate loans for 1 to 5 year terms. At the end of the term, the interest rate converts to variable. On a fixed rate loan, the interest rate remains the same during the entire loan period, even if market rates change.
The major benefit of a fixed rate loan is that you are not affected if the interest rate increases. This means that fixed rate of interest could be cheaper as compared to variable rate of interest.
The interest rate for a fixed rate loan is fixed for a set period of time. These products offer predictable monthly repayments for the agreed term that are independent of the market interest rate variations.
At the end of the fixed period the loan can usually be converted to a standard variable loan or a new fixed period can be negotiated. Fixed loans generally offer little flexibility and fewer features than standard variable loans and early exit can be expensive.