A loan structure made up with a mixture or fixed and variable loan products so that you benefit from both loan types is a hedging strategy. Allow McCarthy Money to help determine if it’s suitable for you and then implement it with your lender of choice if it is.
While most property owners have had experience with both fixed and variable loan products many don’t know the implications of the decision when selecting either. In our experience, we’ve found that most borrowers based their decision on the pricing offered by the bank at the time of taking out the home or investment loan. While pricing is important it shouldn’t be the only criteria and rarely has much to do with the strategy.
Talking this through with McCarthy Money’s credit adviser will give you the chance to factor the pricing consideration into decision while understanding the impact on the loan features, how you plan to operate the facility in the future, how time is an important factor here, and whether your overall financial strategy is impacted as a result.
The purpose of the loan can be a major contributing factor to how the facility is operated. In turn, this can influence your decision to fix the interest rate on the loan as the features available are likely to be affected. For example, if you like to pay extra money to your home loan in an effort to reduce the loan term and then redraw some available funds for unexpected expenses when required, a fixed rate loan might not be the option for you.
A fixed loan tends to limit the amount of extra payments made without penalty and you’re also unlikely to have access to redraw. To make things more complicated, all lenders have their own guidelines in regards to their products and policies therefore what works with one doesn’t mean it’s the same with another.
Consultation is key and McCarthy Money makes it easy to talk through the options and make recommendations so that you can get the most out of the options available.