One of the major decisions to be made when choosing a home loan or loan for a residential investment property is whether to take a variable or fixed interest rate.
A fixed interest rate will not change during the fixed period, providing some certainty for the borrower.
A variable home loan interest rate should move up and down with market interest rates. The main determinant of variable home loan interest rates is the cash rate set by the Reserve Bank of Australia. When the Reserve Bank alters the official cash rate, most variable home loan interest rates change by a similar, if not identical, amount.
Home loans with a variable interest rate usually have greater repayment flexibility. The norm is that the borrower can pay out their loan without penalty.
Read further information about HomeStart’s fixed and split loan options on the HomeStart website.