Home Loan Options

Variable Rate	Fixed Rate	BA Linked Rate
Description
If interest rates rise or drop, the borrower's home loan rate will rise of fall accordingly. This facility is taken up when the borrower believes interest rates are falling and is not too concerned about rising interest rates	Regardless of whether variable rate home loan rates rise of fall, the fixed interest rate for the agreed period will continue to apply. This facility is taken up if the borrower is of the view that interest rates are rising and may do so during the contracted period	This option guarantees a fixed rate for 3 months. The rate will change every three months in line with the cost of short term funding rates. This type of product normally has a minimum loan size and a maximum loan to value qualification criteria
Advantages
A lower initial interest rate as the risk to the lender is less You can borrow more	There is no risk that your payments will go up during the chosen period It is easier to budget Peace of mind	The interest rate will normally be lower than the variable interest rate available Fixed for three months therefore easier to budget
Disadvantages
The interest rate might go up	Higher initial interest rate due to greater risk borne by the lender Harder to qualify for, as initial instalments are higher Should this option be terminated before the expiry date, an additional finance charge will be levied by the lender	Harder to qualify for as the borrower needs to have substantial deposit available Can only fix the rate for a short period