1What is the difference between a fixed rate loan and a variable rate loan?

Fixed Rate Home Loans have interest rates and loan repayments that remain the same for an agreed period of time, and then at the end of the term, revert to a variable rate.

A Variable Rate Home Loan has an interest rate that can move up and down according to fluctuations in the housing market. You should consider a fixed rate if you want the certainty of knowing what your repayments will be and therefore help you budget, not to try and “beat the market” as breaking out of a fixed rate (fixed term) loan contract could cost you thousands of dollars.

2Can I switch between a fixed rate and a variable rate?

Yes. You can change from a fixed rate to a variable rate, or vice versa, at any time. If you switch from a fixed rate loan, you may need to pay an Administration Fee and an Early Repayment Adjustment.

At the end of a fixed rate period your loan will automatically move to the variable rate (at no cost), or you can switch to another set period.

3Ques: As a retiree with a personal loan, can I refinance my loan?

Yes. You can refinance your existing loan if your balance has been reduced to at least 50% or less of the original loan amount.

4What is the difference between a ‘Principal and Interest’ Home Loan and an Interest-only Home Loan?

Principal and Interest Home Loan is where the principal repayment and the interest are repaid together throughout a loan’s term. Whereas an ‘interest only’ loan allows you to pay only the interest on the loan for a certain period of time. If you live in your home, you can have an interest only period of up to 10 years, however if you have an Investment Home Loan, you have up to 15 years to pay interest only, after which you need to pay Principal and Interest for the remainder of the loan.

5What’s a repayment holiday?

If you’re ahead of your scheduled repayments, you can apply to put a hold on your repayments for between two and 12 months. Conditions may apply.

6What’s redraw?

If you’re ahead of your scheduled repayments on your variable-rate loan, you can redraw (the specific term for transferring or withdrawing funds from a loan) those extra funds.

Empower Financial will help you find the right loan, Call us at 0431 381 596