Home Loan – 20 to 30 Year Fixed Rate
If you do not already have a loan and are looking to take out your first mortgage it can be quite the intimidating process if you aren’t armed with all the facts. But, can you even get home loans that are fixed rate for a period of 20 to 30 years in today’s real estate climate in Australia? Actually, you can’t.
Minimum Terms for Fixed Rate Loans
The shortest term you can find for an Australian fixed rate loan at the moment is ten to fifteen years. If you fix the loan rate for an initial fifteen years it is possible to extend the rate for another fifteen years beyond the original term. This gives you some of the benefits of a 30 year mortgage but there are some risks involved as well.
The primary risk of doing a fixed rate home loan and then extending for another fifteen yeas is that you are somewhat at the mercy of the bank and what they are willing to extend to you by way of rates. This means that you might want to shop around to find a bank with a better rate offer for your home loan extension.
Should You Consider Fixing Your Rate?
A fixed rate loan is not ideal for every situation despite the wide preference for these types of loans. There really are times when they are not in your best interest. Make sure you find out these things before you lock yourself into a fixed rate home loan that might not be in your best interest.
Do you plan to sell the home before the end of the loan term? Most banks make this an unwise choice by imposing hefty penalties and fees for early termination of the loan. These fees can be quite costly so beware. Also keep in mind that if you make more than a few thousand dollars per year in extra home loan repayments the banks will levy break fees against you.
Why Can’t You Get 20 to 30 Years Loans with Fixed Rates?
This is definitely a question worth asking. Australia has very strict regulations for the banking industry. Long-term loans like a fixed rate loan of 20 years or more pose a greater risk to the bank. There aren’t many banks that will offer loans that are greater in length than five years – at least not as a fixed rate home loan – because of all the risks involved in long-term lending. The longer the duration of the loan; the greater the risk to the bank for exposure to financial disasters as well as downturns in the economy. This is why you’ll find so few fixed rate home loan lenders that are even willing to offer a ten or fifteen year home loan with a fixed rate.
You will probably have a great deal of trouble attempting to find a 20 or 30 year fixed rate loan anywhere in Australia. At least, not in the traditional sense of a 30-year fixed rate mortgage. You can find a fixed rate home loan for 10 to 15 years though and that’s a good start as far as a home loan goes.
Related posts:
- 30 Year Fixed Rate Home Loan
- 10 year fixed rate home loan
- 15 Year Fixed Rate Home Loan
- ME Bank Super Members 1 Year Fixed Rate Home Loan
- NAB Fixed Rate Home Loan (1 Year)
- ANZ Fixed Rate Home Loan (1 Year)
- eMoney 3 Year Fixed Rate Home Loan
- eMoney 2 Year Fixed Rate Home Loan
- ANZ Two Year Fixed Rate Home Loan
- AMP Bank Introductory 1 Year Fixed Rate Loan
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