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What is a fixed rate home loan?

A fixed rate home loan is one where the interest rate is locked in for a certain period (usually 1-5 years). At the end of this period you can either commit to another fixed rate or revert to a variable interest rate.

A fixed rate loan is useful for budgeting as your repayments are the same every time. However, it also means you’ll have to pay the same interest rate, even if market rates drop. To understand your costs, you can use a budget calculator to see how much you are spending and where. ASIC’s MoneySmart has an online planner to help get you started.

Fixed rate home loans also usually come with less features than variable rate loans and you may not be able to pay your loan off early. However, Qantas Money Home Loans fixed rate loans come with the option to include an offset account. This lets you use your savings to lower the amount of interest you pay and reduce the overall cost of the loan.

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