To fix, or not to fix, that is the question.

 

With fixed rates as low as they are, and speculation of a rate rise in the later part of 2018, it is understandable why people may be considering fixing their loan.

If you are thinking about fixing the interest rate on part of, or your whole loan, remember that there are many things to think about before locking it in.

Here are some possible pros and cons when fixing a loan.

Pros

·         Certainty of monthly repayments for the term of the fixed-rate period

·         Insurance against rate rises, which will increase your loan repayments

·         The peace of mind that the above two outcomes provide

·         You can fix your whole loan or part of it – giving you greater flexibility

 

Cons

·         Additional repayments may attract penalties

·         If a loan is paid out during a fixed-rate term, penalties may be incurred

·         If interest rates fall, you will not receive the benefits of lower minimum repayments

·         Redraw and Offset accounts are commonly excluded from fixed rate offers

 

So ask yourself.

Are you likely to make additional repayments or sell the property in the short term?
Do you regularly use an offset or redraw facility?
Are you happy to pay a slightly higher rate to secure a stable loan repayment?
 
Deciding whether to fix or not depends upon your plans for the future.