Compare 1-year fixed rate home loans
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Why get a 1-year fixed rate home loan?
- Repayment certainty. When you fix your rate you know exactly what your repayments are each month. This means you can budget for your exact repayments.
- Forget about rate rises. Sometimes interest rates rise rapidly. This hits borrowers on variable rate loans immediately. By fixing, you might be on a higher rate. But you don't have to worry about a sudden jump in repayments.
- Easier to break. One of the downsides to fixing is it's expensive if you need to exit the home loan during the fixed period. You pay a fee called a break cost if you refinance or end the mortgage before the fixed period ends. Because a 1-year fixed period is quite short, you're locked in for less time and the break fee will be lower.
How does fixing a loan for 1 year work?
With a fixed rate home loan, your rate doesn't change during the fixed period. After the fixed period ends, the loan reverts to a variable rate loan. With a variable interest rate, your lender can change your interest rate at any time.
Most Australian lenders let borrowers fix their rate for a period between 1 and 5 years.
If you want to fix your rate for a longer period, check out our guides on:
Are 1-year fixed rate loans higher than variable rate loans?
There was a time recently where the lowest interest rates on the market were 1- and 2-year fixed rate loans. But this was a strange moment where interest rates across the board were at record lows.
In 2022 we've seen rates rise fast off the back of high inflation and the Reserve Bank (RBA) raising rates in response. And anyone looking to fix their rate today is definitely going to be on a higher rate than if they'd stuck with a variable one.
Most of the time, a variable rate loan is going to be lower than a fixed rate loan. While some borrowers managed to lock in very low fixed rates, that time has now passed.
How do I compare 1-year fixed rates?
Comparing 1-year fixed rate home loans is no different than comparing another mortgage type.
Focus on the following:
A lower rate is always better
Even if you're not fixing entirely to get the lowest rate, when comparing 1-year fixed rates you should look for a lower rate among those products. It means your repayments will be lower.
Look for a loan with low fees
Some loans have an application fee, a settlement fee or even a monthly account fee. Some loans have almost no fees.
Obviously the less you have to pay in fees, the better.
Fixed rate loans are often less flexible than variable loans. They are less likely to have offset accounts or let you make extra repayments. But some do, so it's worth comparing.
But even if a 1-year fixed rate lacks these features, you'll be on a variable rate in 12 months. Then the loan will likely give you more repayment options.
Can any borrower fix for 1 year?
Most lenders offer both fixed and variable rate loans across most of their product range. Owner-occupiers and investors both have plenty of options if they want to lock in a fixed rate.
While it is true that there are more options out there for variable rate borrowers, it's still possible to find more unique fixed rate products like:
- Fixed rate package home loans
- Fixed rate interest-only investor loans
- Low deposit fixed rate home loans
- Bad credit fixed rate home loans
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