Compare 10 year fixed rate home loans

There are many different kinds of home loans on the market, but if your priority is security and you like your financial arrangements to be predictable, a ten year fixed rate home loan could be a good choice for you. Although they are not as common as two or three year fixed rate loans, they are out there, so all you need to do is find one that suits your circumstances.

Fixing your interest rates for ten years doesn’t mean your loan is limited to ten years in total. It merely ensures that your interest rate remains unchanged for ten years within the total term of your loan, after which you have the opportunity to shift to a variable rate or consider refinancing. You also have the flexibility to split your loan, opting to fix the interest rate on a portion while the remainder is subject to a variable rate. 

You’ll typically find borrowers choose fixed rate home loans for 2 or 3-year terms. However, some lenders offer fixed home loans up to 5, 7 and even 10 years. 

If the Reserve Bank of Australia’s (RBA’s) cash rate is sitting low and you’re able to find loans at very low rates, you could consider fixing one for a long period. This could help ensure your repayments stay consistent, even if national rates climb in the future. 

A long-term fixed home loan makes your mortgage payments predictable. A ten-year fixed rate home loan therefore has the advantage of making it easy for you to manage your budget. Additionally, fixing your rate can serve as a potential safeguard against the financial strain that might result from unexpected increases in interest rates. 

Not all lenders provide ten-year fixed-rate loans, but such options may be available through certain major banks. It’s well worth taking your time to look around and source as many as you can before you start the process of deciding which is best for you.

When you’re considering home loans with a term as long as ten years, your main concern will be with the interest rate they offer. However, it’s important to note that high fees sometimes accompany low interest rates. The last thing you want is to commit yourself to a loan that actually turns out to be more expensive because of this. Using the comparison rate to work out the actual cost of a loan could help protect you from excessive charges because it takes into account fees as well as rates. 

When to fix your rates

Securing favourable interest rates is all about timing. Sometimes global economic events or political issues mean that you can predict when the market is likely to experience a slump. Being ready to make your move at that point means you are likely to secure lower rates than in ordinary circumstances. On the other hand, fixing your home loan interest rates when the national interest rate is high may not be as beneficial. If you lock in a rate during a high period, you could find yourself paying more over the term of the loan if the market rates decrease. 

Monitoring market trends and economic indicators can be useful to understand potential rate shifts but it’s not really possible to time the market unless you possess a crystal ball to predict the future. Therefore, it’s crucial to consider your personal financial situation and the potential for rate fluctuations before deciding to fix your rate. 

Extra features

Loans with fixed interest rates may not offer many extra features. If you are going to make a ten-year commitment, however, features such as the option to make early repayments free of charge or at a low cost can potentially be useful. So think through what you need carefully before you make your choice. 

Fixed-rate loans often come with fewer additional features. Yet, when considering a decade-long commitment, perks like the ability to make extra repayments without incurring significant charges could be beneficial. So, think through and evaluate what you need before you make your choice. 

Pros and cons 

Pros

• Fixing at a low rate keeps your monthly payments low; 
• It’s easy to predict your ongoing costs; 
• If the interest rate falls, you could end up paying over the odds for a long time. 

Cons

• If you want to refinance a mortgage with a fixed interest rate, you may need to wait till the end of the fixed term or incur substantial fees for early termination; 
• Loans with fixed rates often lack extra features like offset accounts or redraw options; 
• Securing a fixed interest rate means you won’t benefit from any subsequent rate cuts by your lender, at least until the fixed period is over.