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ANZ's Fixed Rate Loan: Features and Foibles
ANZ Bank
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A fixed rate loan offers an unchanging interest rate that is generally locked in for one to five years. ANZ's Fixed Rate Loan offers this term, but also the option of a seven or ten years fixed term.
This means that while the monthly repayments for those with variable rates will fluctuate according to interest rate changes, a fixed interest rate will not change for the term of the fixed period. ANZ's seven and ten year fixed rates are locked in at a higher rate than the shorter term loans to allow for inflation and interest rate rises over the longer term.
The advantage to a product like ANZ's Fixed Rate Loan is that homeowners can budget and know exactly what their repayments will be for the term of the fixed rate, so there is no need to worry about rates rising.
It is important to remember, however, that choosing a fixed rate means that if interest rates fall during the fixed period, your interest rate may be higher than the variable rates available.' So while a fixed rate will protect you from any interest rate rises, it also means you won't benefit from lower repayments should interest rates fall during the period of your fixed interest.
ANZ's Fixed Rate Loan claims to offer "the freedom to repay your loan in full at any time." If the loan is repaid during the fixed rate term, however, a Early Repayment Administration Fee of $300 applies. Similarly, additional repayments are permitted, but after a set threshold, early repayment charges may apply.
When choosing a home loan, it is important to look at not only the interest rate, but the features offered by any particular loan and your need to access these features. For example, ANZ's Fixed Rate Loan also offers a redraw facility, but a $25 fee, minimum redraw amount of $2,000 and additional conditions apply.
If you are considering a Fixed Rate Loan, ANZ offer the ability to choose a split loan which means your loan can be divided across a number of options including fixed and/or variable rates. This means that you can have the peace of mind of having a part of your loan fixed, while being able to take advantage of potential fluctuations of interest rates in the variable component of your loan.
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