Wife vs Husband

Hi Scott

My wife and I are having a disagreement about fixed vs variable home loan rates. I have your book and I notice that Rule 2 is “Don’t Fix Your Rate”. Well, my wife just threw your book against the wall! Currently we have a variable rate loan (discounted from the standard variable rate), but let’s say we fixed our rate for three years. After that time, would we be transferred back to the discounted standard variable rate or would there be some issue?

Matt

Hi Matt,

She threw my book against the wall?

Spicy!

Most banks will flick you back to their standard variable rate after your fixed term ends. There’s nothing stopping you from fixing again, of course, but it will be at the rate on offer at that time.

Personally, unless you’re eating sausages each night (things are really tight), I don’t like fixed rate loans, for the same reason that mortgage brokers and bankers love them -- they lock you in!

Listen: get the cheapest variable rate you can, and repay as much as you can, and you’ll come out ahead.

Bottom line: I like the flexibility. Right now I’m seeing sharp variable rates: Citibank has a 3.48% rate (inclusive of a 0.15% cash back with rebate mortgage broker), and UBank are sitting at 3.74%.P.S. I’m ducking!

Scott

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are better bank accounts on offer. How do I know? Because my readers constantly email me about them! So before you do anything, google the best accounts on offer now.