Aaron Whybrow explains why borrowers lock in fixed mortgage rates: budget certainty. Fixed rates limit extra repayments and charge penalties if you break early, so some people split their loan between fixed and variable tranches instead.
Why a fixed rate? Why would you take one up? Hey, it's Aaron from Diagnostics and Finance. Fixed rates are a common offering in the marketplace and they're also a common promotion and special in the marketplace as well. We've just seen some special promotional rates at 2.99 related to owner occupied mortgage today 29th July. So why a fixed rate? Why take up the hype with regards to the promos? And why take one out at all? One of the biggest reasons people take out a fixed rate is because of budgetary means. They want to know what their repayments are month to month, despite what the market's going to do. A lot of people ask me about fixed rates related to whether the rates are going to go up and down and unfortunately no one has a crystal ball to be able to have a look at that. So why would you take up a fixed rate? Well, budgetary reasons is the main one. Other reasons you may want to take out a fixed rate is that you might want to combine it with a variable rate. Now I'll do a little video on variable rate very soon, but you can have both of both worlds if you wish. Fixed rates do have some limitations related to how much extra repayment you can make. You can't typically redraw off them until the rate term rate fixed rate period expires. And with the fixed rate too, it is locked in just like a mobile phone contract. So you might get a contract over two years and if you break it, there's going to be a penalty of one means or another and that's all determined at the day you wish to ask that question. So why would we take our fixed rate certainty for the long term? For budgetary reasons. And maybe we might want to combine it and have the best of both worlds at the same time. So if you're looking at a fixed rate or a variable rate, or you've got questions about that on your specific circumstances, loan amounts, time periods that you are wanting to do things, we can go through that specifically with you and do some calculations on your specific numbers. Hey, it's Aaron for Diagnostics and Finance. Enjoy your day.
