Should you convert your Variable Home Loan rate to a fixed one now- by gjjur4356

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									?From a steadily dropping home loan rate, the rates have started to increase in the last
three months. Should you change over your variable home loan rate option to a fixed
one?

A fixed home loan rate option allows you to know the monthly amount that you will
need to pay to service the loan amount along with the period of time till which you
shall need to pay the amount to the exact last month. This is because in a fixed home
loan rate option the interest rate is fixed irrespective of the manner in which it
changes in the open market.

On the other hand, a variable home loan rate is one that changes based on the money
market or the cash rate set by the Reserve Bank of Australia. This means that if the
home loan interest rates increase, you shall need to pay a higher amount or live with
an extension of the tenure.

Till recently, most Australians were opting for a variable home loan rate since the
interest rates had been falling steadily during the recession or global crisis. It seemed
like a good decision to take at that time. It is interesting to note that even at that stage
about 24% of those who applied for loan in March 2008 chose the fixed home loan
rate option.

However, of late, the interest rates have been increasing and therefore those who had
opted for a variable home loan rate option are now wondering whether they should
change over to a fixed option. If you are one of them, do take all factors into
consideration while you do so. This includes the extra fee that you may be charged for
the transfer of the variable home loan rate to the fixed home loan rate option.
Mel writes about home loan rate among other finance related topics.

								
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