Fixed Interest Rate Loan

Fixed rate loans offer the borrower a period with a steady interest rate applied to their mortgage loan. While the overall term of the loan maybe set at 30 years, you can elect to 'fix' the rate for periods ranging from 1 to 15 years. When the selected period expires you can either 're-fix' or just allow the loan to rollover over to a variable facility.

As a general rule, lump sum reductions or extra payments are not allowed without penalty through what is commonly known as a 'pre-payment fee'. The same may apply if the loan was repaid in full during a fixed rate period. However, lenders are starting to provide some flexibility in allowing extra repayments up to a certain amount each year.