Choosing an interest rate type is a bit like choosing an outfit for Melbourne weather—you can go for the heavy coat (Fixed), the t-shirt (Variable), or a bit of both (Split) and hope for the best. chawlafinance.com.au works with clients to determine which "personality" fits their lifestyle.
1. Fixed Rates: The "Peace of Mind" Option
A fixed rate stays the same for a set period (usually 1–5 years). It’s perfect for the budget-conscious person who wants to know exactly how much will leave their account every month. Even if the Reserve Bank of Australia (RBA) decides to hike rates, yours stays put. It’s great for blood pressure, but if market rates drop, the borrower is stuck with the higher rate.
2. Variable Rates: The "Go With the Flow" Option
Variable rates can change at any time. They offer more flexibility, like unlimited extra repayments and access to offset accounts. The risk? When rates go up, repayments go up.
3. Split Loans: The "Best of Both Worlds"
Can’t decide? We often recommend splitting the loan. For example, fix 60% for stability and keep 40% variable for flexibility. It’s the "mullet" of the mortgage world: business in the front (fixed), party in the back (variable).