Is your mortgage working for you?

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Is your mortgage working for you?

AFTA@Work Newsletter - Qantas Credit Union

There is no better time than the present to review your lending needs and assess your mortgage options. From year to year your needs can change, so ask yourself whether your loan and its features and benefits are still working for you, whether you have achieved your objectives and if you could improve on them.

In the currently low interest rate market, many of our members are asking whether now is the right time to fix or not, or what other options are available. Below are some highlights of key features on different home loan products you could consider when deciding what type of loan is right for you.

Variable Rate Mortgages:

With a variable mortgage you will have the opportunity to take advantage of cuts in interest rates. If you believe the rates will stay low for a good period of time, this could save you money now and over the term of your loan. You may also have the option of making extra loan repayments if you decide to take out a variable rate mortgage – this feature option isn’t available on all fixed rate products. You may also avoid break free fees if you chose a variable rate mortgage and change or pay off your loan early e.g. if you sell your home.

Fixed Rate Mortgages:

If you’re more comfortable with the security of knowing what your repayments will be each month for a set period of time, then a fixed rate mortgage product might better suit your needs.

Repayment security and the ability to plan your budget are among the top reasons why people consider fixing their mortgage. When interest rate movements are tough to predict, removing the uncertainty is a major benefit of fixing your mortgage.

Split Rate Mortgages:

You could hedge your bets. Some people chose to fix a portion of their loan to cushion themselves against interest rates rises. On the flip side, the remaining portion of the mortgage remains variable and gives people the opportunity to take advantage of interest rate cuts, and some of the features of the of a variable mortgage.

Compare your loan:

Please see below the benefits and potential drawbacks of different loan products at a glance.

loan type	description	benefits	drawbacks
Variable Rate	The interest rate is variable and can change.	Enjoy the lower repayment amount if rates go down Can have offset accounts available Can make extra repayments	If interest rates go up the repayment amount increases No certainty with the repayment amount from month to month
Fixed Rate	The interest rate is fixed for a set term and usually reverts to a variable rate on term expiry.	Fixing at the right time can be a real benefit, especially if rates go up A fixed and predictable repayment for the fixed term of the loan	Check for any restrictions including: Break costs and fees A limit and fee for early repayment May have limited features Will not receive the benefit of falling interest
Split Rate	A combination of part fixed and part variable rate loans	Reap the benefits of the fixed portion if rates go up and enjoy the benefit if rates go down on the variable portion	Check for any restrictions including: Break costs and fees Early repayment fees Limited features like no offset account Check access to features like redraw and an offset account

loan type

description

benefits

drawbacks

Variable Rate

The interest rate is

variable and can change.

Enjoy the lower repayment amount if rates go down

Can have offset accounts available

Can make extra repayments

If interest rates go up the repayment amount increases

No certainty with the repayment amount
from month to month

Fixed Rate

The interest rate is fixed

for a set term and usually

reverts to a variable rate

on term expiry.

Fixing at the right time can be a real benefit, especially if
rates go up

A fixed and predictable repayment
for the fixed term of the loan

Check for any restrictions including:

Break costs and fees

A limit and fee for early repayment

May have limited features

Will not receive the benefit of falling interest

Split Rate

A combination of part fixed and part variable rate loans

Reap the benefits of the fixed
portion if rates go up and enjoy the benefit if rates go down on the variable portion

Check for any restrictions including:

Break costs and fees

Early repayment fees

Limited features like no offset account

Check access to features like redraw and an
offset account

Talk to us today!

At Qantas Credit Union we offer a great range of home loan products and options. Talk to us about how we can help you get a great deal on your home loan or range of banking services on
1300 747 747 or www.qantascu.com.au

The information in this article is of a general nature and does not constitute as advice in relation to any investment of purchase. It has been produced without taking into consideration your personal financial circumstances, objectives or needs. Prior to making any decision you should conduct your own investigation and analysis of any benefits or costs associated with such. You should seek your own independent legal and financial advice. Normal lending criteria applied. Terms and conditions apply and are available on request. Qantas Staff Credit Union Limited trading as Qantas Credit Union ABN 53 087 650 557, AFSL/Australian Credit Licence 238305.

*source: https://www.moneysmart.gov.au/borrowing-and-credit/home-loans/fixed-vs-variable-home-loans#gain

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