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Monday, 11 April 2022

Compare Home Loan Interest Rates: Home Loan & Personal Loan Comparison (Au).

  Ahamed       Monday, 11 April 2022

VARIABLE-RATE VS FIXED RATE HOME LOAN IN AUSTRALIA AND ALSO WE WILL COMPARE HOME LOAN RATES! 

Hi everyone welcome back to my Blog my name is Aymen and in today's article we are going to see the  "compare home loan rates" between a variable rate home loan and a fixed rate home loan

Now if you have a mortgage or even if you've been following the news "compare home loan rates" you will see that there's a talk there's a lot of talk going on on interest rates that some of the banks or even the analysts are saying the rates are going to rise if not this year then maybe next year and even the RBA said that we are living in uncharted territory so we can't really expect we don't know what's going on.

variable-rate vs fixed rate home loan in australia and also we will compare home loan rates!

So but overall it seems like that maybe the rate is going to increase by mid this year or by end of this year so I thought this would be a good time to you know to show you the difference between a variable rate home loan and a fixed rate home loan and how does this work

PROS/CONS(VARIABLE)

VARIABLE ADVANTAGES

  1. FLEXIBILITY - So number one advantage of having a variable rate home loan is the repayment flexibility so the variable rate home loan will give you a wide range of repayment options you know including the ability to pay off your home loan faster without paying any break costs
    So when you have a variable home loan it normally comes with um you know like an offset account or a facility like a retail facility so that you can easily use The focus keyword "compare home loan rates" to pay down extra on top of your minimum mortgage and that will help you to reduce the interest you pay on your home loan and ultimately help you to you know to reduce the length of your mortgage and pay down your mortgage early.
    So and that's the feature that normally comes with a variable loan.

  2. EASY TO REFWANCE - Now the second one is easy to refinance now if you get a better deal somewhere you can easily switch to a different lender or a different product if you have a valuable home loan without paying any breakfast obviously The focus keyword is "compare home loan rates".
    So reference can be a great tool if you are looking to you know looking to pay down your home loan faster because you can get a better deal somewhere with a better interest rate and that is only possible when you are in a variable home loan rate.

  3. PAYLESS IF RATES FALL - Now the third one that I got is paid less if the rate falls so what I mean is um the rate can fluctuate like what you have seen in last maybe five-ten years like RB has been reducing their cash rate and it is only it is one of the reasons that a bank can reduce the interest rate.
    Maybe and there are so many other reasons if the funding costs become less a bank can pass out that you know and sort of reducing your interest rate by doing this what it means if the home loan that is variable The focus keyword "compare home loan rates" you know you will get the benefit of you to know to reduce rate which ultimately helps you to reduce the monthly repayment and it's only possible if you have a home loan that is a variable with a variable interest rate.

VARIABLE DISADVANTAGES

  1. WHEN WE "COMPARE HOME LOAN RATES" PAY MORE IF RATE RISE - Now and now what are the some of the disadvantages of having a variable home loan now obviously number one is paying more if a rate rise
    So what it means is that if "RBA" you know the reserve bank of Australia increases the cash rate that means that if you have a variable loan that will fluctuate and you're going to pay more if the bank passes out that cost to you.
    Or there are so many other reasons like if the funding cost for the bank like what bank does bank normally borrow it from the wholesale market and if the money become expensive in the wholesale market bank, is forced to you know to increase your valuable rate and ultimately what happened you will end up paying more with I mean when your rate goes up so this is one of the disadvantages of having a variable rate home loan.

  2. CASH FLOW UNCERTAINTY - And number two is a cash flow uncertainty because the rate can fluctuate over the life of the loan sometimes it is hard to predict whether your repayment will go up or down depending on what you know ways the rate is moving because you know sometimes if the rate goes up then you may need to um come up with some surplus fund from somewhere "compare home loan rates".
    So it is a bit uncertain so you need to really have a proper budget if you are on a variable home loan these are the few disadvantages of having a variable home loan.

and i think that's all but so the next just a move to the fixed-rate how long so

PROS/CONS(FIXED)

FIX RATE ADVANTAGES

  1. WHEN WE "COMPARE HOME LOAN RATES" NO IMPACT ON RATE RISE - Obviously number one benefit of a fixed-rate home loan is no impact on rate rise so how fixed-rate homeland works obviously in Australia we normally see you can fix your home loan from one to five years what it means if you're doing it for say five years your repayment is sort of locked for next five years also 60 monthly payments and it doesn't matter whether the rate is going up or down you will still be paying that fixed monthly repayment over you know that life of that fixed-rate period.
    FOR EXAMPLE, if you do it for one year then you'll be only paying for 12 months or one year and then once you're fixed rate expired you gotta renegotiate with your bank and depends on that you gotta get a new rate whether you can continue doing that for another few years in fix or if you want you can go back to the variable.

  2. SET AND FORGER - Now number two the advantage is set and for gaze so what I mean is by set and forget once you get a fixed-rate home loan doesn't matter with this for one year or five years you are pretty much locked in and you sort of just um you know put that on autopilot for next five years for them if you're locking it for five years.
    So it's easier to budget it is easier to focus your expenses your you know cash flow this is one of the most advantages of having fixed you know even in you know how much money you need every month for next five years so that's a number one reason that people actually go for fix also in the case when the rate is going up you know people also want to do fix and lock that repayment so that they know um their budget and they it can help them to you know to manage their cash flow easily.

FIX RATE DISADVANTAGES

  1. LESS FLEXIBILITY - Now so this few disadvantages of fixing your home loan is number one is less flexibility what I mean by legs flexibility is when you are fixing a home loan so fixing means you kind of block and a lot of the banks only allow you to appear a little bit more on top of your home loan, for example, I think that the bank average bank in Australia will only allow paying like 20 000 every year to pay off you like to pay on top of your minimum repayment.
    So if you wanna you know like if you wanna pay off your home loan or if you're selling your property or if you wanna refinance then you need to come up with those big break costs a lot of the time if your home loan and that is fixed.
    So and you obviously you could he can't most of the time you can't use offset account or um or you can use some reader facility when in fixed or fixing alone but it depends on the bank most of the banks don't allow you to use offset but they can allow you to use a reader facility if you are in fixing loan but that facility will also be kept as I said it can be kept for at least 10k or 20k per year so that it is not as flexible as that you can see with a variable home loan.

  2. FEWER FEATURE - Fewer feature means I think it's pretty similar what I mean by fewer features is you don't have this offset account that you can normally request with a variable rate home loan and even if you have a retro facility that can be limited and that how much money you can put towards your hormone depending on the bank.


  3. NO BENEFITS OF RATE CUT - No benefits of the rate cut so what it means when you are fixing a home loan you kind of locked in for the period that you're fixing so if the bank reduced their you know interest rate or if the RBA or the reserve bank of Australia cut the cash rate or even the funding costs get less you won't get the benefit.
    Because your interest rate will be fixed and this is something that you gotta carry on for the next four-five years so you won't get the benefit of any rate cut when you are fixing your home loan.

This was a very quick article thought I'll just do that Article just to explain to you you know what's the difference between a variable and fixed-rate home loan and I think you now you can make a more informed decision what you want to do whether you should fix or leave that as variable.


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