If you are considering fixing your rates to protect against potential future
rate increases, it is important that you understand both the benefits and
potential costs of fixed rate loans.
The main feature of a fixed rate loan is interest rate certainty, which
allows you to lock in the rate for a set period of your choice, for up to
10 years. Fixed rate loans do however have certain restrictions and may not
suit all borrowers. Here are a few questions to consider before making a
decision:
Generally, an ANZ Fixed Rate Loan does not offer the same level of
flexibility as an ANZ Variable Rate Loan. Most ANZ Variable Rate Loans
allow you to make additional payments at any time, without incurring
additional costs. ANZ Fixed Rate Loans may incur an Early Repayment Cost
(ERC) and an Early Repayment Administration Fee if the loan is paid out
in full within the fixed rate period or if additional repayments are made
to the loan during the fixed rate period.
However, early or additional repayments up to a set tolerance amount can
be made without incurring an ERC on ANZ Fixed Rate Loans. Additional
repayments up to either 5% of the loan amount at the start of the current
fixed rate term or up to a maximum of $5,000, whichever is less, in each
year of the fixed interest rate period, will not incur an ERC. This is a
major factor for consideration when deciding on your loan type. If you
intend to make extra repayments to your loan (above the tolerance), then
a variable rate loan could be a better option. You can always split your
loan and have part of it with a fixed rate and the other part with a
variable rate.
 |
|
|
In general, with an ANZ Variable Rate Loan you are able to switch to
another product whenever you wish (converting/re-negotiating fees may apply).
ANZ Fixed Rate Loans on the other hand, restrict your ability to switch to
another loan during the fixed rate period. If you do choose to switch loans
during the fixed rate period, you may incur an Early Repayment Cost and an
Early Repayment Administration Fee. However, you are able to switch loans without
incurring an Early Repayment Cost once the fixed rate period has expired
and the loan has reverted to the standard variable rate.
Mortgage offset accounts are available with the
ANZ One Year Fixed Rate Home Loan
and
Residential Investment Loans,
as well as most variable rate loans. Mortgage offset accounts also become
available for fixed rate loans (2-5, 7 and 10 year terms) once they revert
to their variable rate period.
ANZ One is a 100% mortgage offset account that can help you reduce the length of your home loan by months or even years and save you thousands of dollars over the life of the loan.
ANZ's Fixed Rate Home Loan and Fixed Rate Residential Investment Loan products have an ongoing monthly loan administration charge of $10.00 per month. The Fixed Rate monthly loan administration charge only applies during the fixed interest rate period.
Additional payments made to ANZ Fixed Rate Loans during the fixed rate
period are not eligible for redraw. Once the loan reverts to the variable
rate, any additional payments made during the variable rate period can
then be redrawn.
Terms and conditions apply.
Fees and Charges apply. Refer to relevant 'Loan Options' pages:
When deciding whether to fix your loan, it is useful to consider:
If you currently have a standard variable rate loan (with no margin), the
table below may help you plan for possible rate changes. It shows how much
your repayments increase, based on a standard variable rate
of 9.62% p.a.
|
0.25% |
0.50% |
0.75% |
1.00% |
1.25% |
1.50% |
1.75% |
| $50,000 |
$10.42 |
$20.83 |
$31.25 |
$41.67 |
$52.08 |
$62.50 |
$72.92 |
| $100,000 |
$20.83 |
$41.67 |
$62.50 |
$83.33 |
$104.17 |
$125.00 |
$145.83 |
| $150,000 |
$31.25 |
$62.50 |
$93.75 |
$125.00 |
$156.25 |
$187.50 |
$218.75 |
* Table calculated using standard variable rate
of 9.62% p.a.
Extra monthly repayment amounts are calculated on a loan over 30 years.
Your current personal situation will influence your decision on whether
to fix or not to fix. If, for example, you are planning to start a family
in the near future, you may need to consider the impact of reduced family
income when making choices about whether to lock in your interest rate.
Always compare the current fixed rates to variable rates before making
your decision.
On the other hand, you can take advantage of low interest rates to pay off
your variable loan sooner. Instead of reducing your repayments when rates
decrease, continue making repayments at their existing level - it could
save you thousands of dollars in interest.
Use the
ANZ Loan Repayment Calculator
to see how rate movements could affect your loan.
ANZ Economic Outlook
Whilst historical interest rate changes are not indicative of future rate
movements, examining past trends demonstrates the implications of rate
movements which in turn helps you to plan for rate increases as well as
decreases.
The graph below shows how the ANZ three-year fixed rate compares to the
ANZ Standard Variable Rate over the past ten years.
Many borrowers live in fear of rate spirals such as those during the late
1980s and early 1990s. But recent history tells us rate cycles are
typically more moderate.
Choosing to fix at different times can result in different interest charges.
You need Adobe Reader to view PDF files. You can download
Adobe Reader free of charge.
|
top