Some borrowers want to know exactly how much they are going to pay throughout the duration of the loan term. Fixed rate loan has fixed interest rate and fixed repayments. If you don’t want to be subjected to uncertainty in changes in interest rates, this type of home loan is for you. With a fixed rate loan, the lender and borrower agree to a specific interest rate for a period, which could be one up to five years.

Advantage:

• Repayments stay the same even if home loan interest rates rise.

Disadvantages:

• Repayments stay the same even if home loan interest rates rise.
• You might pay penalty fees if you want to make additional repayments.