With the loan package that we are currently on, we are currently enjoying a 0.6% discount on the normal variable interest rate, which is below the current Fix interest rate. however the beauty of a fix interest rate is that it is fixed and won't increase in line with the predicted RBA's increases.
What factors do I need to make sure that switching over to a fix interest rate is the better way to go.
- The fee incurred to switch the home loan over to a fix interest rate is smaller than the savings in the interest repayments. I am pretty confident that it will be.
- The length of the fix interest loan will need to be carefully considered. If the length of the term is too long, we may miss the drop in th interest rate when it falls down, however i don't this is likely within the next six to seven years. If the length of the term is too short, we risk going into a higher interest rate when we exit the fix loan. We will probably be negotiating for a 3 or 4 year term.
- The current fee structure does not change significantly as we quite like it. We get $0 fee on any of our account at our bank, because of the home loan that we have.
- We are still able to pay extra into our home loan.
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