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Can't Decide About Interest Rates? Split It.
National Bank
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In the world of astrology, the sign of Libra is depicted as a set of scales and by nature, Librans are supposed to be balanced individuals who like to weigh up both sides of an issue before making a decision.
When it comes to choosing a home loan, many home buyers adopt Libran qualities and have difficulty choosing between a fixed rate and a variable rate home loan.
If you are having trouble deciding which type of home loan suits you, maybe you should consider a split home loan. The option to split your loan between fixed and variable rate is offered by most banks, including National with their NAB Tailored Home Loan.
Fixed rate loans, such as the options offered by NAB, have the advantage of protecting the borrower against rate rises for the fixed period, but they also restrict the flexibility of the loan. For example, borrowers with fixed rate loans are usually prevented from making extra repayments in order to pay off their home loan debt sooner.
With interest rate rises at the top of every variable rate home loan borrower's mind, having your NAB home loan split so part of it is charged at a fixed rate can offer great peace of mind.
Ideally, you should try to split your home loan so the majority is at a fixed rate with the remainder at a variable rate. For example, let's say you have a $300,000 NAB home loan that you chose to split. You could have $200,000 of your loan set at NAB's fixed rate for two years and the remaining $100,000 charged at NAB's variable rate. If any interest rate rises occurred over that time, the majority of your debt would be protected and only the repayments on the $100,000 loan would increase.
Opting for a split loan gives home buyers the chance to experience the best of both worlds. When choosing the right type of home loan for your situation, you should speak with your financial broker for detailed advice on the features and flexibility that you require. Shop around with a number of different lenders before making your decision.
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