converting your Variable Home Loan rate to a Fixed Home Loan
11 May 2011
One of the most important decisions of your life is choosing the correct home loan. Even after you’ve managed to find the perfect house in the perfect area, it’s the financial choices you make next, which will determine your future economic position.
Home loans are usually offered with a ‘fixed home loans’, ‘variable home loans’ or ‘split’ (mixture of both). A fixed rate home loan offers you a set interest rate for an agreed period of time, whereas variable home loans will fluctuate with the market, but will often offer more flexibility and features.
If you’ve already made this decision and are now feeling the pressure of changing financial circumstances, it’s not too late to reconsider your options. If, like many other Australians, you opted for a standard variable mortgage (the most popular choice across the country) and you now want to consider converting to a fixed mortgage, then you have choices.
Why switch from a variable to a fixed rate?
Looking for security over time
A fixed rate home loan will ‘lock’ you into a specific rate for a specific amount of time. This is perfect if you see your circumstances remaining the same for the next few years and you want the security of being able to precisely plan your repayments. Stability over time is a major factor for many and fixed rate loans offer precisely this.
You want to be exempt from markets highs and lows.
If you believe that interest rates will be rising over the next few years then a fixed rate home loan may actually end up saving you money. If you had opted for a fixed rate a couple of years ago you would be feeling quite pleased with yourself after seven interest rate rises since 2006.
For example if you are moving overseas and want to be able to budget your mortgage repayments carefully, then fixed rate home loans are the perfect choice. Perhaps you are finding that your financial circumstances are swayed by other repayment pressures, in this case fixed rate loans give you the benefit of easy budgeting.
Lock in Low Rates
Of course, apart from not having to ride the interest rate waves; if you are acquiring a fixed rate mortgage at a time of national interest rate lows, then you’ll be able to take advantage of lower monthly payments.
Bankwest understands that your needs vary and are undoubtedly going to change as the years go by. You may have taken out a variable home loan as you were keen on the flexibility, yet for the reasons above now want to consider a fixed rate. Switching to a different Bankwest product is easy. Our lenders will help you find the loan that suits you based on your current situation. For more information on Bankwest’s fixed rate home loan options see the Home Loans Comparison Table.