Should I go for fixed or variable or split home loan?

There’s a lot more than just the current interest rate to think about when you’re deciding whether to go fixed or variable. Currently fixed home loan rates can look very tempting – on HashChing’s deals page, fixed rates are all lower than the average basic and standard variable rates. Fixed rates have certainly been a popular search item in recent months. However, if you fix your home loan and then end up needing to break the contract for some reason – perhaps because you decide to move house or want to refinance – you could end up paying a large break cost. Essentially, some things you need to think about when deciding between fixed or variable include whether you are likely to move in the near future. If so, a fixed rate may not be for you. Also think about how important it is for you to have certainty in your repayments. If you’re on a tight budget and you absolutely don’t want your repayments to change, then a fixed rate can give you that certainty. Also weigh up where you think the official cash rate (and by association, home loan interest rates) are headed – but remember that financial institutions are also continually analysing this and have already factored their predictions into the current rates on offer! Finally, of course the current market and rates on offer should play a part. Choosing between a fixed, variable or split mortgage is mostly about deciding what’s right for both your lifestyle and budget. Some people probably like to try and outsmart their financial institution by playing the fixed/variable market, but it’s more important to make a considered decision that suits your household budget and priorities, and leave it at that. And remember, you can always hedge your bets by fixing part of your home loan and leaving part on variable rates (or in other words, splitting it). Try our split home loan calculator and play around with some scenarios.

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