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Three year fixed mortgages are the most popular fixed mortgages on the market. That’s because borrowers who tend to fix their home loan for a period of time, will do so because they are concerned for rising interest rates or plan to pay off the interest only for that fixed period.
For many borrowers who face these two situations, they may choose a three year fixed mortgage because it gives them enough time to get use to the repayments from their income each month or fortnight or when they choose their repayment schedule.
Compared to an earlier fixed period of one or two years for instance, a three year fixed mortgage gives that extra period of time of security in knowing that your repayments will be constant for the whole time. Longer fixed periods such as four or five year fixed mortgages tend to be much higher in interest compared with three year fixed mortgages and therefore can be much more expensive and not worth fixing for so long.
On the other hand, some borrowers prefer fixing for longer than a three year fixed mortgage, particularly if they are a property investor who will be paying interest only and selling the property after the fixed period.
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Monthly repayments are based on advertised rate, loan amount and selected payment frequency over 25 years.
The comparison rate is based on secured credit of $150,000 and a term of 25 years. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan.
Consider whether this general financial advice is right for your personal circumstances. You may need financial advice from a qualified adviser. Read our detailed disclosure here.
