Fixed or Variable Rates?
Do you know the difference between a fixed and variable rate?
If you don’t have a background in finance, it can be difficult to understand how they work.
Here’s a quick breakdown;
Variable Rates (Move Up and Down)
A variable interest rate will move up and down as lenders react to decisions made by the RBA and the marketplace. Variable interest rates do not have a fixed term but some can have discounted interest rates over a period of time. These are known as Introductory Rates or Honeymoon Rates.
Variable rate loans can be quicker to pay off as they allow more flexibility on your repayments.
Fixed Rates (Stay the Same)
A fixed rate loan will stay at the same rate regardless of anything that happens in the market or with the RBA. This means your repayments will be regular and you’ll always know how much money will be withdrawn from your account. This makes budgeting easy and will safeguard you against future interest-rate rises.
Most consumers will take out fixed rate loans for 1-3 years but longer term options exist.
If you want more information about interest rates give me a call.
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