What is a fixed rate lock?
When taking out a fixed rate loan, it is important to understand that the fixed interest rate is set on the day of drawdown / settlement, not necessarily the advertised rate when you apply for the loan.
In some cases, the fixed interest rate offered by the lender may change between application and settlement. Whilst the fixed rate may not change between application and settlement, there are times when it will increase and other times where it will decrease.
By entering into a fixed rate lock facility, you remove the risk of the fixed rate increasing, provided your loan settles within 90 days from taking out the fixed rate lock.
Whilst there are some lenders who do not charge a fixed rate lock fee, most lenders charge a minimum $500 or 0.15% of the loan amount, but some charge higher fees than this.
Whenever you look to take out a fixed rate loan, you should always consider whether a fixed rate lock is a appropriate for your circumstances.
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