Fixed vs Variable Interest Rates: What type of loan should I go with – one with variable rates or fixed rates?

This is a very common question that many of our clients ask who are looking to take out a loan.

The best option for you will depend on many personal factors along with various external factors.

Personal factors generally are those items that we have total control over.

Personal Factors may include:

• Stage of our life; such as whether you are single, married, starting a family, or looking to retire, and
• Purpose of loan; business &/or investment versus personal loan, and
• Forecasting personal changes; such as jobs, your income, or perhaps an inheritance.

External Factors may include:

• The economy; such as a change in government policy or legislation, and
• Cash rates; for example, an increase in interest rates, and
• Lenders; banks changing their lending requirements.

Both personal and external factors are quite dynamic, thus knowing how to get the best and perfect result that will last the life of the loan requires someone with the ability to accurately forecast the future
-something we all wish we had!

With the ever-changing environment, we all live in, we can only go on what we believe is the best option for us at that point in time. As a result, we must weigh up the advantages and disadvantages of each option.