Fixed rate home loans can offer repayment certainty in an ever-changing market, but could you commit to a five-year solution?
Five years. Half a decade. This is about the longest period that most traditional lenders will allow you to repair your mortgage. There are a few lenders offering fixed rate seven or ten year home loans, but the higher interest rates hardly seem worth it.
Fortunately, five-year fixed rate home loans seem to sidestep much of this, offering competitive market rates instead of repayment certainty. Many vendors offer them as well, which means there is a lot to choose from.
Buying a home or looking to refinance? The table below shows five-year fixed home loans with some of the lowest interest rates in the market for homeowners.
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Lender |
Rate type | Gap | Redraw | Ongoing charges | The initial costs | LVR | Lump sum reimbursement | Additional refunds | Pre-approval | ||||
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Fixed | More details | |||||||||||
Reward Me Home Loan Fixed 5 Years ($ 300k +) (Principal & Interest) (New Client) |
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Fixed | More details | |||||||||||
Fixed home loan (principal and interest) 5 years |
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Fixed | More details | |||||||||||
Basic fixed-rate mortgage (principal and interest) (LVR) |
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Fixed | More details | |||||||||||
Yard Home Loan Fixed 5 years (Principal and Interest) (LVR |
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Fixed | More details | |||||||||||
myBlue Home Loan (Fixed Rate) (Principal and Interest) (LVR |
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Fixed | More details | |||||||||||
UHomeLoan Fixed OO (Principal and Interest) 5 Years (LVR |
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Fixed | More details | |||||||||||
5-year fixed base mortgage (LVR |
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Fixed | More details | |||||||||||
Basic Flyer for Fixed Home Loan (Principal and Interest) (LVR) |
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Fixed | More details | |||||||||||
Fixed mortgage loan at favorable rate (NSW, ACT and QLD only) 5 years |
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Fixed | More details | |||||||||||
Fixed rate mortgage (QLD only) (principal and interest) 5 years |
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Fixed | More details | |||||||||||
Yard Home Loan Fixed 5 years (Principal and Interest) (LVR |
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Fixed | More details | |||||||||||
Fixed rate mortgage (principal and interest) (NSW and ACT only) 5 years (LVR |
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Fixed | More details | |||||||||||
Reward Me Home Loan Fixed ($ 300k +) (principal and interest) 5 years |
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Fixed | More details | |||||||||||
Housing package plus fixed personal special first buyer (capital and interest) 5 years (LVR ≤ 80%) |
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Fixed | More details | |||||||||||
5-year fixed-rate mortgage |
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Fixed | More details | |||||||||||
Your Way Plus 5-year fixed mortgage (principal and interest) (LVR |
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Fixed | More details | |||||||||||
SmartSaver fixed investment loan (principal and interest) 5 years |
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Fixed | More details | |||||||||||
Standard fixed rate mortgage (principal and interest) (new client) 5 years ($ 150,000 +, LVR |
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Fixed | More details | |||||||||||
Full Package Fixed Housing Loan 5 years (New Client) |
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- Fast turnaround times, can meet a 30 day settlement
- For purchase and refinancing, minimum deposit of 20%
- No ongoing or monthly fees, add compensation for 0.10%
Basic criteria: a mortgage in the amount of $ 400,000, variable, fixed, principal and interest (P&I) with an LVR (loan-to-value) ratio of at least 80%. However, the table “Compare mortgages” allows calculations to be performed on variables selected and entered by the user. All products will list the LVR along with the product and price which is clearly posted on the product supplier’s website. Monthly repayments, once the basic criteria are changed by the user, will be based on the advertised rates of the selected products and determined by the loan amount, type of repayment, loan term and LVR entered by the user. /you. Prices correct as of October 14, 2021. See disclaimer.
Pros and Cons of Five Year Fixed Rate Home Loans
There are a few considerations to take into account before embarking on a five year fixed rate home loan, including these pros and cons.
Advantages
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Money back guarantee: As the name suggests, fixed rate loans fix the interest rate, which in turn fixes your repayment. It can help you if you are looking for cash flow certainty.
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Weather all rate increases: Even a difference of a few basis points from your mortgage interest rate can add hundreds to your repayment, which can blow your budget up.
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Lock-in at the bottom of the rate cycle: Rates are at or near all time lows, so the only way is to increase, right? If you stare at the bottom, you won’t have to worry about any increases in your mortgage on the horizon.
The inconvenients
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Higher interest rates: Most of the competition in fixed loans has taken place over a period of 2-3 years. While 5-year rates are always competitive, they are often around half a percentage point (50 basis points) more expensive than the advertised rate than their fixed 2-3 year siblings.
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Less flexibility: A fixed mortgage usually has more restrictions, including the ability to pay extra for the home loan. Banks and lenders typically cap additional repayments on fixed loans at $ 10,000 per year.
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Break costs: A broker Savings.com.au spoke to once saw a client pay $ 35,000 in breakage fees to keep their home loan fixed. These are fees calculated based on the lender’s wholesale funding costs. The longer you need to extend your fixed period – and the more you borrowed – the higher your break costs are likely to be.
The market is full of competitive five-year fixed rate loans, just be sure to do your research before deciding if the repair is right for you, your budget, and your mortgage goals.
Photo by Avocado SY on Unsplash
The entire market was not taken into account in the selection of the above products. Instead, a smaller part of the market has been envisioned, which includes the retail products of at least the Big Four Banks, the Top 10 Customer-Owned Institutions and Australia’s largest non-banks:
Products from some vendors may not be available in all states. To be taken into account, the product and the price must be clearly published on the website of the supplier of the product.
In the interest of full disclosure, Savings.com.au, Performance Drive, and Loans.com.au are part of the Firstmac group of companies. To learn more about how Savings.com.au handles potential conflicts of interest, as well as how we are paid, please click on the links on the website.
*Comparison rate is based on a loan of $ 150,000 over 25 years. Please note that the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as draw charges and cost savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.
