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Choose the Loan That Best Suits Your Financial Goals
Deciding between a variable or fixed rate loan can be a game-changer for your financial strategy. At Legacy Mortgage Solutions, we help you navigate the differences so you can secure the right loan for your unique circumstances.
How it works
Understanding Fixed Rate Loans
Fixed rate loans lock in your interest rate for an agreed period—usually between 1 to 5 years—providing certainty and predictability in your repayments.
This stability is ideal if you prefer a consistent budget and want protection from market fluctuations.
This stability is ideal if you prefer a consistent budget and want protection from market fluctuations.
Predictable Repayments
Enjoy consistent monthly payments throughout the fixed term.
Protection from Rate Rises
Your interest rate remains unchanged even if market rates climb.
Fixed Term Options
Choose a term that matches your financial plans and risk appetite.
Flexibility
Benefit from extra repayment options and the ability to redraw funds if needed.
Potential Savings
Enjoy lower rates when market conditions are favourable.
Offset Accounts
Link your savings to reduce the interest charged on your loan balance.
How it works
Understanding Variable Rate Loans
Variable rate loans offer a dynamic approach with interest rates that can fluctuate based on market conditions.
This option can lead to potential savings when rates drop and provides additional features such as extra repayments and offset accounts.
This option can lead to potential savings when rates drop and provides additional features such as extra repayments and offset accounts.
Understanding the difference between fixed and variable rate loans
Key Differences & Things to Consider
Choosing between fixed and variable loans involves balancing repayment stability against flexibility. Here are some factors to weigh:
Repayment Stability vs. Flexibility
Fixed rate loans offer predictable repayments, perfect for budgeting, while variable loans offer the chance to benefit from market dips but come with the risk of rate increases.
Market Trends
Consider current economic forecasts. If rates are expected to rise, locking in a fixed rate may be beneficial; if rates are steady or declining, a variable option could offer savings.
Loan Features
Variable loans often come with additional features like offset accounts that can help reduce interest payments. Fixed loans, however, tend to have fewer bells and whistles but offer greater certainty.
Financial Goals & Risk Tolerance
Assess your long-term financial objectives and comfort with fluctuating repayments. A fixed rate may suit those who want certainty, whereas a variable rate might be better if you’re comfortable with some risk for potential rewards.
Are you located outside of Melbourne? Get in touch and we can help find the best solution for you, no matter where in Australia you’re located.
How it works
Our Loan Process
Initial Consultation
We begin with a comprehensive discussion to understand your financial situation, goals, and preferences.
Loan Comparison
Our experts compare a range of fixed and variable rate products from leading lenders to find the best options for you.
Tailored Recommendation
Based on your needs, we provide a customised recommendation outlining the pros and cons of each option and how they align with government initiatives where applicable.
Application & Approval
We guide you through the application process, ensuring all paperwork is complete and negotiating on your behalf for favourable terms.
Ongoing Support
After settlement, we continue to provide support, including advice on refinancing options as market conditions change.
Government Initiatives & Schemes in Melbourne
Understanding Fixed & Variable Rate Loan Options
There are several government initiatives and schemes that can complement your loan choice, especially if you’re a first home buyer or looking to refinance:
First Home Guarantee Scheme (FHBG)
Eligible first home buyers can purchase with a deposit as low as 5%, with the government guaranteeing the remaining amount. This scheme is typically available with both fixed and variable rate loans.
First Home Owner Grant (FHOG)
Available in various states, this grant provides financial assistance to first home buyers, which can help offset costs irrespective of your chosen loan type.
Refinancing Incentives
Some lenders may offer incentives for refinancing existing loans, helping you secure better terms and improve cash flow, whether you choose a fixed or variable option.
We work with you to understand which initiatives you qualify for and how they can be integrated into your loan strategy for maximum benefit.
Access the best lenders in Australia to find the best rate for your loan!
Support
Frequently asked questions
Everything you need to know about securing a loan in Melbourne.
What is the main difference between fixed and variable rate loans?
Fixed rate loans secure your interest rate for a set term, offering repayment stability, while variable rate loans can fluctuate with market conditions, potentially leading to savings or higher repayments.
Which loan type is right for me?
It depends on your financial goals and risk tolerance. If you value certainty in budgeting, a fixed rate might be best. If you prefer flexibility and can tolerate fluctuations for potential savings, consider a variable rate loan.
Can I switch between fixed and variable loans?
Switching from variable to fixed is generally easier and possible with most lenders. Switching from Fixed to Variable however is not as simple as it can incur a breakage cost if broken prior to the fixed rate maturity. There are a number of factors that can influence a breakage cost so it’s best to have an in depth discussion about your options. Our team can help assess when a switch might benefit your financial strategy.
Are there any extra features with variable rate loans?
Variable rate loans often include features like offset accounts, extra repayment options, and redraw facilities, which can help reduce your overall interest costs.
How do government initiatives affect my loan?
Government schemes like the First Home Guarantee Scheme or First Home Owner Grant can reduce upfront costs and improve borrowing power. These initiatives are available with many fixed and variable products, particularly for first home buyers.
What factors influence the choice between fixed and variable rates?
Market trends, your personal risk tolerance, and your financial goals all play a role. A fixed rate offers security during periods of rate uncertainty, while a variable rate can offer savings when market conditions are favourable.
How do interest rate changes impact my repayments?
For variable loans, any increase or decrease in the market rate will directly affect your monthly repayments. Fixed rate loans, however, maintain the same repayment amount throughout the fixed period regardless of market fluctuations.
What are the early repayment fees for fixed rate loans?
Fixed rate loans often come with break costs or early repayment fees if you exit the fixed term early. These costs can vary between lenders, so it’s important to understand them before committing.
Are there benefits that can help with refinancing?
Yes, some lenders have initiatives and incentives that encourage refinancing, which may help you secure lower rates or better terms. We keep up to date so we can advise you on the best refinancing options available.
What documentation do I need to apply for a loan?
Typically, you’ll need proof of income, bank statements, identification, and details about your financial commitments. We guide you through gathering all necessary documents to streamline your application.
Ready to choose the right loan for you?
At Legacy Mortgage Solutions, our experienced brokers are committed to helping you understand the differences between fixed and variable rate loans, including any relevant government initiatives, so you can make an informed decision that supports your financial goals.
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Not sure what kind of loan you need?
The major benefit of using a broker to finance other large purchases besides property is obtaining finance that is tailored to fit your current financial circumstances and needs. With depreciating assets, the right finance can also potentially save you money on interest and fees, or potentially help you maximise your tax benefits. AND MORE – Not sure what kind of loan you need for your current financial circumstances? That’s our job. We deliver tailored finance solutions chosen from a panel of leading lenders, and give you peace of mind that your loan is working for you. Contact us today to find out all the ways we can help you.
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