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Understanding Home Loan Options: Fixed, Variable, and Split Rates

Selecting the ideal home loan is a pivotal milestone on your path to becoming a homeowner (or buying another property). At Fidelis Financial, we acknowledge that this decision can be overwhelming. To simplify the process, we'll dissect the disparities between fixed-rate, variable-rate, and split-rate home loans, and outline their respective advantages and drawbacks. Always keep in mind that our team of experts is readily available to address any inquiries you may have.

Fixed-Rate Home Loans:
A fixed-rate home loan locks in your interest rate for a specified duration, usually spanning one to five years. Here's what you should be aware of:


Steady Rates: With a fixed-rate loan, your interest rate remains constant throughout the fixed term, ensuring stability and predictability in your monthly payments.
Simplified Budgeting: Knowing your exact repayment amount makes budgeting straightforward and more manageable.
Shield from Rate Increases: If interest rates surge during your fixed period, your rate remains unaffected, providing a safeguard against higher payments.


Limited Flexibility: Fixed-rate loans often entail restrictions on making extra repayments, utilizing redraw facilities, or exiting the loan prematurely without incurring break costs.
No Benefit from Rate Reductions: If interest rates decrease during your fixed term, you won't reap the benefits of lower rates, potentially missing out on potential savings.

Variable-Rate Home Loans:
Variable-rate home loans are dynamic, with interest rates subject to fluctuations. Here's what you should consider:


Flexibility: Variable-rate loans typically offer more flexibility, permitting additional repayments, access to redraw facilities, and the option to switch to a fixed rate if desired.
Potential Savings: When interest rates decline, your repayments decrease, potentially resulting in substantial savings over time.
No Break Costs: Exiting a variable-rate loan generally does not involve break costs, affording you greater freedom.


Rate Uncertainty: The variable nature of these loans means your interest rate and payments can rise if rates increase, potentially affecting your budget.
Budgeting Challenges: Fluctuating payments can make budgeting less predictable.

Split-Rate Home Loans:
A split-rate home loan combines elements of both fixed and variable rates, enabling you to divide your loan into different portions with distinct rate structures. Here's why it might be a suitable choice:


Rate Security: Enjoy the rate stability of a fixed portion while still benefiting from the flexibility of a variable portion.
Flexible Repayments: Make additional repayments on the variable portion and utilize redraw options while maintaining predictability on the fixed portion.
Risk Management: Mitigate the impact of interest rate fluctuations by diversifying your loan across both rate types.


Complexity: Managing two different loan portions can be more intricate, requiring vigilance in monitoring rate changes for both.
Potential Costs: Some lenders may impose additional fees for split loans.

How Fidelis Financial Can Assist:
At Fidelis Financial, we recognize that selecting the right home loan can be overwhelming. Our team of brokers are here to guide you at every stage. Whether you have queries about fixed, variable, or split-rate loans, we offer expert counsel to help you make well-informed decisions. Your financial goals and unique circumstances are our utmost priority, ensuring that you secure a home loan that aligns perfectly with your needs and aspirations. Don't hesitate to reach out to us for personalized assistance in navigating the world of home loans.

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