Contemplating the switch?
In considering switching loan types, home owners need to realise it is not a straightforward case of interest rate comparison.
For example, an average standard fixed term loan of $250,000 currently carries approximately $20,000 worth of exit fees counteracting any savings to be gained from lower variable rates offered. In fact, break fees (as they are called) for fixed-rate loans rise as interest levels fall to allow banks to meet interest payment obligations to term deposit customers. A point many personal lenders may not realise.
On the flipside, many investors with standard variable rates are pondering the security of a fixed-rate mortgage. Banks are currently offering around five per cent making this an attractive option considering the volatile nature of the current economic climate. Yet again, exit fees do apply.
The most important consideration for consumers is to seek advice. Why not call your local broker for a no obligation quote on options that may be most beneficial to you?