Fixed or Floating?

Fixed Rate Loans

The interest rate remains the same for the whole of the period for which it is accepted and agreed on, usually between six months and five years.  These rates are generally lower than the variable rate. This protect you against rises in interest rates, allowing you to budget with confidence.


Variable/Floating Rate Loan

This loan rate can be varied at any time and is likely to be affected when the Reserve Bank raises or lowers the OCR. It changes with competition between banks.

Payments and loan term changes can be made, as can lump sum payments with no penalty making it a truly flexible loan.


Split/Combined Loan

A portion of your loan can be on a fixed rate (typically 80%) and the remaining on floating.  The floating portion can be on a revolving credit facility (See below).

Gareth Jenkins