A fixed home loan rate is taken out for a period of time at a fixed rate.  When the period set out in the agreement ends, you can then fix the rate again or switch to a variable rate.  You can either fix the whole loan or part of the loan.  In a rising interest rate market, a fixed rate loan can protect you from any fluctuations in the market.

Fixed home loans used to be fairly ridged, but with new products on the market they are now fairly popular.  Standard variable home loans are still the most popular option, but a fixed rate does have many advantages.

For people wanting to keep to a strict budget and control what payments are going out each month, then a fixed rate gives you that assurance.  Many fixed rate loans allow you to make extra payments which is great if you have extra money occasionally, or you increase your income and want to pay more.  However, some fixed rate loans still charge for early payments so you would have to either pay a fee, or keep to life of the agreement and pay all the interest originally agreed.

When choosing a fixed rate loan, consider the length of the loan.  The term can be up to ten years but the most popular seems to be between one and five years. 

As with all financial decisions it is important to look at your personal situation and your own financial goals.  Making predictions for the future can be risky and you need to consider whether you want security or flexibility with your loan.

Want to talk  to a someone who has experience in all types of home loan?  Then contact Your Local Finance Broker.