The great debate of fixed vs variable interest rates is back on the agenda, given there seems to be some cheap fixed rates currently on offer. Its the one question that I am continually asked by savvy clients, and for the most part, my answer remains the same. A fixed or variable loan is a gamble either way as its far from being a black and white answer. The truth lies somewhere in the grey. However, if you do your homework, the risk can be calculated.

Ultimately it’s about paying the least amount of cash for the duration of your loan. If you think a fixed loan will help achieve that, there are several points you need to consider:

ADDITIONAL FEES: You will likely incur some fees to switch to a fixed rate, either with your current or new lender.
BREAK COSTS: If you want to change, refinance or discharge your fixed-rate loan, you may be required to pay break costs, even if you sell the property.
EXTRA REPAYMENTS: There may be a limit to how many extra repayments you can make during a fixed loan period.
NO RE-DRAW: Even if you can make extra repayments, these extra funds may not be available through re-draw during the fixed period.

So, if you think a fixed rate is still the way to go, ask yourself the following: “Will I sleep easier at night knowing exactly what my mortgage payments will be, knowing that variable interest rates could go down?”

Every situation is unique, so if you an interested in running a comparison on your current loan - let’s dive into the grey. - Give us a call

First Avenue Finance Team