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20 Mar 2018
20 Mar 2018

Why you need to know your interest rate

Finance
First Home Buyer
Home Loans
Investing
Why you need to know your interest rate

Why you need to know your interest rate

Read time: 2 minutes

By staying on top of interest rates, borrowers can make informed decisions about choosing a first-time home loan or getting a better rate by refinancing.

Interest rate percentages are based on a number of factors: the Reserve Bank, the cost of money on overseas markets and the general state of the economy. Interest rates don’t appear to move by much when looked at as a simple number, sometimes only a fraction of a per cent (referred to as a basis point, which is equal to 0.01%), but each basis point makes a significant difference to the total cost of a loan and makes a big difference when you’re working to pay down your mortgage.

When you first lock in a home loan, you will choose a fixed or variable interest rate. A fixed rate does not change over a set period of time, and your payments will be predictable each pay cycle. On the other hand, a variable rate is attached to the market interest rate and will move up and down with the market.

Shehan Wijayasinghe