> Things you need to know about Fixed Rate Mortgages | Better Choice

Things you need to know about Fixed Rate Mortgages

April 20, 2016

Fixed Mortgage Interest Rates give you the ability to lock in your interest rate for a set period of time.

This may suit you if you want the assurance of knowing exactly what your repayments will be & therefore give you confidence to budget accurately & plan you finances.

We caution against using Fixed Mortgage Interest Rates to “beat the market”, as you’re effectively gambling on future interest rate movements.

It also may not be a good idea to fix your interest rate if you think you might sell; your property, make large lump sum repayments, switch to a variable interest rate or vary your loan in any way during the fixed term. 

If you break out of a Fixed Rate mortgage early, make large lump sum repayments over & above a certain amount, (varies from Lender to Lender), or vary your loan in any way that constitutes breaking out of the fixed rate period early, then you may have to pay the Lender an Early Repayment Penalty, (ERP). 

The ERP may amount to many thousands of dollars.

Neither the Lender nor your Better Choice Mortgage Services Finance Consultant can predict or estimate for you what that ERP may be.

The amount of the ERP is dependant on a number of variables, for example (and the following list is not exhaustive):

  • The fixed interest rate applied to your loan at drawdown
  • The period of time you have fixed your interest rate for
  • The period of time remaining of the fixed term at the point you actually break the loan
  • The fixed rates on offer at the point of time you actually break the loan

Furthermore, you may also want to consider that a number of features that are associated with Variable Mortgage Interest Rate loans , may not be available with a Fixed Mortgage Interest Rate loan, e.g.

  • 100% offset feature
  • Redraw feature
  • Construction loans

Neither the Lender nor your Better Choice Mortgage Services Finance Consultant can advise you as to whether your should take a Fixed Mortgage Interest Rate Loan or a Variable Mortgage Interest Rate loan. 

We strongly recommend that you as the client undertake your own research, evaluate the features & benefits of either loan type , and seek independent advice when considering the option to fix the rate on their loan. 

The borrower may chose to fix the rate on part of their mortgage & leave the rate variable on the remaining portion of the loan.

It is solely the borrowers’ decision as to whether you chose to Fix the rate on your mortgage or not.


Better Choice Mortgage Services is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this website. While the information contained within this website is periodically updated, no guarantee is given that the information provided in this website is correct, complete, and up-to-date. Although the Better Choice Mortgage Services website may include links providing direct access to other internet resources, including websites, Better Choice Mortgage Services is not responsible for the accuracy or content of information contained in these websites. Links from Better Choice Mortgage Services to third-party sites do not constitute an endorsement by Better Choice Mortgage Services of the parties or their products and services. The appearance on the website of advertisements and product or service information does not constitute an endorsement by Better Choice Mortgage Services, and Better Choice Mortgage Services has not investigated the claims made by any advertiser. Product information is based solely on material received from suppliers. Advanced Finance (Pty) Ltd t/a Better Choice Mortgage Services are not financial planners or accountants and we would encourage our clients to seek professional advice before acting on any a financial or taxation information in this news post.

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