Consumers warned to "think" before getting fixed rate home loans

Thursday 01 September 2011

Article by Mozo

Aussies hoping to secure home loans have been urged to consider all the ramifications of taking out a fixed-rate mortgage before they make any decisions.

Fixed rate home loans 'should be approached with caution'

Consumer Action co-chief executive officer Carolyn Bond explained that these rates are useful for people who know they could not cope with an increase in interest rates.

However, she observed that for those who think they can handle shifts in the amounts they pay, a variable rate home loan may be preferable.

Ms Bond explained that this form of mortgage will enable Aussies to take advantage of any reductions in interest rates.

She warned those that have decided on a fixed rate option: "Be aware that if rates do go down you can be stuck with a higher-interest loan that will cost you a bomb to get out of."

This comes after property investor Peter Koulizos told news.com.au that those who have their eye on a house should monitor it closely and consider putting in an offer when the seller lowers the price.

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