Fixed Rate Loan

Choosing a fixed rate loan provides the borrower with certainty as to the level of repayments. Fixed rate loans are generally available between one and five year terms. Often it is prudent to pay a small fee to ‘lock in’ a fixed rate particularly when standard variable rates are set to rise. The pit fall to be careful of: the decrease of the standard variable rate during the time frame chosen to remain at the fixed rate. Often there are financial penalties if wanting to remove yourself from exposure to the fixed rate environment.