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In Australia, you can choose between a fixed rate and variable rate home loan. You also have the option to split your mortgage.
Learn about the advantages of each type of loan and things to consider before switching home loans.
The type of loan you choose will depend on your needs and financial circumstances.
The interest rate for a fixed rate loan will stay the same for a set period of time – usually 1 to 5 years.
Advantages of a fixed rate loan:
Things to consider
A fixed rate loan is less flexible and comes with fewer features than a variable interest rate loan. You won't be able to take advantage of lower interest rates if they go down.
The interest rate of a variable rate loan will go up and down with the market.
Advantages of a variable rate loan:
Things to consider
It can be difficult to plan if you don't know what your repayments will be. As well, you'll pay more if interest rates go up.
Don't want to commit to either type of home loan? Splitting your mortgage into separate accounts gives you the best features of both types of loans. How you want to split the loan is up to you. You can open an offset account or make extra repayments with the variable rate loan. The fixed rate portion will protect you against interest rate fluctuations.
Say you have a $600,000 mortgage. You decide to split your loan 50/50: $300,000 as a variable interest rate, and $300,000 as a fixed interest rate, locked in for 2 years. If interest rates go up, the money in the fixed rate loan is protected. If rates go down, the variable rate loan benefits.
You might want to change your home loan to:
Do some research, use online calculators and other tools, and compare our home loan products. If you'd like help in deciding which home loan may be suitable for you, make an appointment with one of our home loan managers.
Read more: Should you refinance your home loan?
All HSBC home loans can be switched. However, switching from a fixed rate loan to another home loan is subject to break or early repayment costs. For more information about HSBC fees, see our Schedule of Fees and Charges.
To switch to another product or refinance a home loan, contact your home loan manager, branch or the contact centre. We'll prepare some simple documentation and ask for your digital consent to proceed with the product switch. The switch will take approximately 72 hours and will be confirmed in writing.
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This article is intended to provide general information of an educational nature only. This information should not be relied upon as financial product advice as it does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of the information to your own circumstances and seek independent legal and financial advice prior to making any investment choice. There are risks associated with any investment and this document is not intended to list all of them in respect to any particular investment opportunity. Prices, levels and indications contained in this document are illustrative only and may not represent future performance. HSBC does not warrant or represent the performance of any investment opportunity.
Disclaimer: Credit provided by HSBC Bank Australia Limited ABN 48 006 434 162. Australia Credit Licence 232595. Terms, conditions, fees, charges and HSBC lending criteria apply. This article does not take into account your personal or financial situation. Please consider a relevant Product Disclosure Statement, available at hsbc.com.au or by calling 1300 308 008 before making a decision about this product.
