Compare 4 year fixed home loan rates

Four-year fixed loans have a number of potential advantages, including:

• Protection from interest rate rises: When you fix your home loan rate for four years, your repayments will remain the same from month to month for the whole period. This means that you will be protected from interest rate rises, for that period, and if your lender raises interest rates significantly on the home loan you have, you will still be paying a lower rate.
• A sense of certainty in your repayments: Along with protection from interest rate rises comes a certainty in your repayments. Knowing that you will be paying the same interest rate on your home loan for four years can give you the ability to budget and account for other needs and expenses, knowing how much your mortgage will cost. Keep in mind the comparison rate on a home loan product will combine the interest rate with most fees and charges, to give you a more accurate cost of the loan overall.
• The potential to save on fees and charges: Fixed rate home loans tend to come with relatively few features compared with variable rate ones, which can come with such things as offset accounts and redraw facilities. While these may be appealing, they can also make a loan more expensive, so if you are happy without these extras, a four-year fixed loan could include fewer fees and charges.

Four-year fixed home loans can also come with some potential drawbacks, including:

• Expense: Fixed rate home loans offer a sense of certainty, especially in an environment when interest rates are on the rise, but the trade-off for this certainty is that you might need to fix your interest rate at a higher level than other rates on the market, in hopes that this rate will be cost effective for your over time, or indeed, that it may at some point end up being lower than the average variable rate.
• The potential to miss out on a lower interest rate: When you lock your rate in, you will be protected from interest rate rises, but conversely, you will also miss out if interest rates fall. That said, in an environment of rapidly rising variable rates, this may not be as much of a concern.
• An inability to make additional repayments: In general, variable rate home loans are structured in a way that allows you to make extra repayments, bringing down the balance of the loan and reducing the interest you pay. Fixed rate loans generally do not come with this feature, and if they do, it will usually come at the cost of additional fees and charges, or there could be limits on how much extra you can contribute.
• Fewer features: As mentioned, variable rate loans can come with more features, such as offset accounts, which can help you lower the balance of your home loan by making additional repayments, while giving you access to your funds for everyday banking. If you do want to have features like this on a fixed-rate loan, some lenders may offer them at an extra cost, but with a fixed rate loan, you may feel you are missing out on added features.

If you want to break your fixed-rate loan before the fixed term ends, it could be possible, depending on the terms and conditions of the loan, but you might be charged a ‘break cost’ or a ‘break fee’. These generally apply to most kinds of fixed rate home loans, and are intended to compensate the lender for loss of profits they might face as a result of you breaking the terms of the contract.

Break fees will vary, but are generally calculated with consideration of the interest rate you locked in (compared with the current interest rate), how much time remains on your fixed-rate term, and the loan amount you originally borrowed.

The length of time you choose to fix a home loan is negotiated between you and your lender. You can generally choose the time period for which you lock in or ‘fix’ your interest rate – depending on who you take out a home loan with and what your needs and priorities are, this could be one, three, four, five or even 10 years.

Interest rates typically fluctuate over time, depending on economic conditions. Locking in a low interest rate could be possible, if you have researched the market and are prepared to haggle with lenders. Typically, lenders will have an ‘advertised rate’ for their loans (and it’s also a good idea to check their comparison rate, too), which is the rate borrowers will be charged to take out a four-year mortgage at the time that it’s advertised. It might be possible to negotiate a lower-than-advertised rate on your loan, as some lenders may offer discounts for particular types of borrowers, such as those with an excellent credit history. You could also use Canstar’s comparison tables to work out a shortlist of lenders you’d like to approach, and, armed with the knowledge of what other lenders are offering, use that market info to haggle for a better rate.

However, when you take out a four-year fixed rate home loan, or any fixed rate home loan for that matter, it is important to keep in mind that your interest rate will typically be locked in at the date you settle on the property, not the date you applied.If interest rates have changed between the time you apply for a fixed loan product and the time you settle, you may end up paying a higher rate. Note that some institutions will lock in a rate before settlement if you are willing to pay a lock-in fee to guarantee it.

When the fixed term of your home loan comes to an end, the loan will typically revert to a variable rate for the remainder of the term, which could be many more years.

Generally, at the end of the fixed-rate term, you are able to refinance with your existing lender, or another. Depending on your needs and preferences, you can refinance to a fixed, variable or split rate home loan.

If you’re in the market to compare four-year fixed home loan rates or find a loan that suits your particular needs, you can compare home loans at the top of this page to find a lender with a competitive rate. You can also view the winners of Canstar’s Fixed Rate Home Loan Awards to find out which lenders offer value for money to Australian home buyers.