Fixed rate loans

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 Q. Could you give me a list of lenders that will offer fixed interest rate loans on which you can make extra payments? We currently pay more than the minimum amount due, and are keen to keep this up for another few years.

 

 A. Fixed rate loans suit borrowers who like the security of knowing how much their repayments will be, as fixed rates insulate them from higher repayments should interest rates rise during the term of the loan. It’s easier to budget for as monthly payments won’t fluctuate.  
 
However, fixed rate loans are generally less flexible compared to variable rate loans. Some fixed rate loans won’t allow you to make extra repayments; some lenders limit the dollar amount that you can repay over the life of the loan. Some lenders might charge you to repay extra and charge for redraws.  
 

The Home Loan tables at the back of each issue of Your Mortgage detail which lenders allow you to make extra repayments on fixed loans and any limits. Loan conditions and fees vary greatly between lenders. You should also ask lenders if there are any break costs if you pay off your fixed loan in a lump sum or refinance to a new loan. Break or exit costs can be substantial compared to variable rate mortgages.

Related: Home Loan Calculator

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