To fix or not to fix?

Ever wondered whether you should fix or keep your interest rates variable?

The truth is it really depends on your situation and what you are after as there are both benefits and disadvantages to both.

Some of the main advantages of a fixed interest rate include:

Certainty in your loan repayments: as the rate will be fixed, you will know your repayments will not move despite changes to the cash rate. This is great for those who like to budget.

Securing a great interest rate: If the RBA decides to raise interest rates, you will be locked into a great rate over the fixed term saving you in additional interest costs.

Some disadvantages of a fixed rate:

Limits to extra repayments: As fixed rates are secured in advance from the bank, they often impose limits as to how much additional payments are allowed per year/

Less Flexibilty: Looking to refinance or sell your home during the middle of your three year fixed term? You may be in for a large break costs which can be in the thousands of dollars!

Securing a bad interest rate: If the market moves downward after you've secured your 3 year fixed rate, you'll have to wear the increased interest rate until the maturity of your rate.