Fixed home loan interest rates are usually for a set period of time, with the most popular terms ranging from one to five years. During this time, your interest rate and monthly payments will not change, even if market interest rates go up or down.
If you’re about to buy a house or you’re looking to refinance you may be asking yourself, should I fix my home loan or not?
Especially with interest rates at an all time low.
The benefits of fixing your loan include:
- Predictable and even monthly payments
- Peace of mind, knowing you can meet your monthly budget.
While fixing your loan can help you lock in a low interest rate, the main reason to choose a fixed loan is to ensure that your monthly payment doesn’t change unexpectedly and cause financial difficulty. As a case in point, on a $500,000, 30-year, 5% variable rate loan, even a 2% increase could end up costing an additional $643 per month – a difference that may break even the most careful budget (these figures are shown as examples only).
All indications are that interest rates are about to rise. No one can accurately predict how interest rates will move.