Variable interest rates are generally lower than fixed (although The Rock’s 2 and 3 fixed rates are currently lower than the variable) and allows borrowers to make extra repayments. This can reduce the amount of money owed over the life of your home loan. However, variable rates fluctuate as the market changes. While rates have dropped to their lowest levels in decades, the tide is already starting to turn and interest rates have started to head back up.
As the name suggests, a fixed interest rate locks in a set rate for up to five years. This means that, even if the market changes, your repayments will stay the same. On the downside, there are often costs involved if you want to sell or switch during the fixed term.
Some borrowers choose to hedge their bets and split their home loan rate. In this scenario, they lock in a portion of the loan with a fixed interest rate and the other portion with a variable rate.
If you would like to talk to a Rock lender about locking in one of our low fixed rates, call 1300 083 793 or go to therock.com.au