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Home loan interest rate lock

Avoid losing out on a great rate with a rate lock and save over the life of your loan.

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Rate lockImagine comparing home loans and finally settling on the perfect loan with the right combination of fees, features and interest rates. You fill out your application and submit it, hopeful that the rate you’ve applied for won’t change in the time it takes for your loan to settle. And then your lender raises your rate. That's where a rate lock comes in handy.

A rate lock guarantees that you will receive the loan rate under the conditions that were advertised at the moment you applied for a loan. It usually covers you from rate changes for up to 90 days until settlement date. Using a rate lock means you can avoid the surprise of receiving a rate different to the one you applied for.

Rate locks are generally only offered on fixed rate home loans.

How does a rate lock work?

A rate lock is usually applied before a fixed rate home loan settles as it sometimes may take a certain time to process your home loan application. Once you lock in the rate, depending on the lender and the rate lock available, the rate you apply for will be locked in for up to 90 days before your loan settles.

There’s usually a fee for this, and if during the rate lock period rates go down, most lenders will allow you to enjoy the lower rate - although you’ll still have to pay the rate lock fee. Some rates may be locked in at settlement, and with others it’s when the application is

Case study

Susan has been looking for her dream house for quite some time and finally has found one that suits her and her young family. Her husband and children are also thrilled with the idea of moving into a better, larger and more comfortable home that has a pool and a nice garden.

She has applied for a fixed home loan with a rate of 4.50% fixed for three years, so she can create an accurate budget during this time. She decided that it would be wise to get a rate lock as well.

Some time after submitting the application, the rate for her loan rises to 4.65%. Because of her rate lock she has avoided a rate hike of 0.15%, meaning she is now saving more money on repayments each month.

Pros and cons of a rate lock

Pros

  • No surprises. You can apply for a fixed rate home loan and not worry about rates rising before your loan is approved.
  • If rates drop you can still benefit. If during the rate lock period rates drop, many lenders will still allow you to benefit from the lower rates. As always, check the terms and conditions.

Cons

  • Rate lock fees. Rate locks can cost between $300 to $750 and in some cases even more, so be sure to shop around, and try to get an idea of whether or not rates will be rising or falling so you know whether it’s worth the fee.

Things to consider about rate locks

When considering buying a home with a fixed rate home loan and using a rate lock, you should consult a financial planner or mortgage broker first. These kinds of professionals can tell you more about the prices on the market and will be able to tell you whether the rates might drop or rise in the short term.

You should note that even with the best experts, it’s difficult to forecast where rates might be over the course of a year or even a month.

Also keep in mind that some fixed rate home loans have a free rate lock. Free rate locks are usually shorter than rate locks with fees, generally lasting for 60 days as opposed to 90 days. Still, a free rate lock could save you hundreds of dollars and guarantee that you receive the rate you apply for.

FAQ about rate locks

How long will the rate lock last for?

You can usually lock a rate in for 90 days before your loan settles.

What loans qualify for a rate lock?

A rate lock is generally only applicable on fixed rate home loans.

What if rates go down during the rate lock period?

Most lenders will enable you to enjoy the lower rates; however you will still have to pay the rate lock fee.

Compare fixed rate home loans

Data indicated here is updated regularly
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
UBank UHomeLoan - 3 Year Fixed Rate (Owner Occupier, P&I)
2.14%
2.41%
$395
$0 p.a.
80%
A competitive fixed interest rate loan with no ongoing fees. Requires a 20% deposit.
HSBC Fixed Rate Home Loan - 2 Year Fixed Rate LVR 80% or below (Owner Occupier, P&I)
2.09%
2.98%
$0
$0 p.a.
80%
Lock in a competitive fixed rate for 2 years and buy your home with a 20% deposit.
Well Home Loans Balanced Fixed Home Loan - 2 Year (Owner occupier, P&I)
2.22%
2.21%
$250
$0 p.a.
90%
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
Greater Bank Great Rate Home Loan - Discounted 1 Year Fixed with Family Pledge Home Loan - Up to 110% LVR (Owner Occupier)
1.99%
3.52%
$0
$0 p.a.
80%
Requires a family member to act as guarantor.
Get one of the lowest rates on the market with this fixed rate mortgage and borrow more with help from a family guarantor. NSW, QLD and ACT residents only.
Virgin Money Reward Me Fixed Rate Home Loan - 2 Year $300k+ Special offer (Owner Occupier, P&I)
2.29%
2.87%
$300
$10 monthly ($120 p.a.)
80%
$2,500 refinance cashback
Buy your home and lock in a low rate for the first two years. Get a $2,500 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 29 August and settle by 28 February 2021.
IMB Fixed Rate Home Loan - 3 Year Fixed (LVR 90% Owner Occupier, P&I, NSW and ACT borrowers only)
2.39%
3.08%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online. Available with a 10% deposit.
Well Home Loans Balanced Fixed Home Loan - 2 Year (Investor, P&I)
2.39%
2.78%
$250
$0 p.a.
90%
A 2 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.
UBank UHomeLoan - 1 Year Fixed Rate (Investor, P&I)
2.29%
2.84%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
Tic:Toc Live in Loan Fixed Rate Home Loan - 2 Year (Owner Occupier, P&I)
2.09%
2.35%
$0
$0 p.a.
90%
Get a very low interest rate and pay no application, settlement or valuation fees. Apply online for full approval in real time and add a 100% offset account for $10 a month.
Suncorp Home Package Plus Fixed - 2 Year Fixed Rate Special Offer $150k+ LVR ≤90% (Owner Occupier, P&I)
2.29%
3.28%
$0
$375 p.a.
90%
A low fixed rate loan available for borrowers with 10% deposits. Refinance to an eligible Suncorp loan and get a cashback of $2,000 or $3,000, depending on your loan amount. Other conditions apply.
Well Home Loans Balanced Fixed Home Loan - 3 Year (Owner Occupier, P&I)
2.27%
2.23%
$250
$0 p.a.
90%
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.
Heritage Bank Fixed Rate Home Loan - 2 Year Fixed Rate (Owner Occupier, P&I) New Customers Only
2.59%
4.26%
$600
$8 monthly ($96 p.a.)
95%
Get a partial offset account and the option to make interest-only repayments.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate - 1 Year Fixed (Owner Occupier, P&I)
2.39%
3.85%
$0
$395 p.a.
95%
$2,000 refinance cashback
Enjoy a competitive rate with no application fee for this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Well Home Loans Balanced Fixed Home Loan - 3 Year (Investor, P&I)
2.44%
2.76%
$250
$0 p.a.
90%
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.
UBank UHomeLoan - 1 Year Fixed Rate (Owner Occupier, IO)
2.29%
2.47%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
Newcastle Permanent Building Society Real Deal Home Loan - Special Offer 1 (Owner Occupier, P&I)
2.59%
2.63%
$595
$0 p.a.
80%
$2,000 refinance cashback
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
Heritage Bank Advantage Package - 1 Year Fixed (Owner Occupier, P&I) New Customers Only
2.59%
3.32%
$0
$350 p.a.
95%
Get a partial offset account and flexible repayments with this package loan.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate - 3 Year Fixed (Owner Occupier, P&I)
2.49%
3.68%
$0
$395 p.a.
95%
$2,000 refinance cashback
A two year fixed rate home loan with no application fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
UBank UHomeLoan - 1 Year Fixed Rate (Owner Occupier, P&I)
2.14%
2.46%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
Virgin Money Reward Me Fixed Rate Home Loan - 3 Year $300k+ Special offer (Owner Occupier, P&I)
2.29%
2.83%
$300
$10 monthly ($120 p.a.)
80%
A competitive fixed rate mortgage available with a 10% deposit.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate - 2 Year Fixed (Owner Occupier, P&I)
2.44%
3.76%
$0
$395 p.a.
95%
$2,000 refinance cashback
Enjoy a discounted fixed rate and the ability to package the loan with other financial products. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
UBank UHomeLoan - 3 Year Fixed Rate (Investor, P&I)
2.29%
2.74%
$395
$0 p.a.
80%
Pay no ongoing fees on this investment loan fixed for 3 years.
Virgin Money Reward Me Fixed Rate Home Loan - 2 Year LVR < 90 (Owner Occupier, P&I)
2.84%
2.97%
$300
$10 monthly ($120 p.a.)
90%
Enjoy a competitive fixed rate with no application fee.
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier, P&I)
2.54%
3.98%
$595
$0 p.a.
95%
$2,000 refinance cashback
Borrow up to 95% LVR of the value of the property you're buying and pay no ongoing fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
UBank UHomeLoan - 5 Year Fixed Rate (Owner Occupier, P&I)
2.59%
2.53%
$395
$0 p.a.
80%
A five year fixed rate offer with no ongoing bank fees.
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2 Responses

  1. Default Gravatar
    PeterFebruary 20, 2018

    Do I need to pay rate lock if it goes over 90 days and I am unable to settle the property?

    • Avatarfinder Customer Care
      MayMarch 12, 2018Staff

      Hi Peter,

      Thanks for your question.

      Locking your home loan interest rate usually comes with a fee. So if you’ve applied for it, yes, you still have to pay the fee even when you’re unable to settle your loan/it goes over 90 days. Contacting your lender directly is also best so they may be able to advise as to how much and when would the fee be charged.

      Cheers,
      May

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