Bricklayer's Guide to Fixed Rate Loans & Extra Repayments

As a bricklayer, you understand the value of building something solid and lasting. The same principles apply when you're buying a home - you want a foundation that's secure and payments that won't shift under pressure. That's where fixed interest rate home loans come into play, especially when combined with a smart extra repayment strategy.

Understanding Fixed Interest Rate Home Loans

A fixed interest rate home loan locks in your interest rate for a set period, typically between one to five years. Unlike variable home loan rates that fluctuate with market conditions, your fixed rate stays the same regardless of what happens in the broader property market or economy.

For tradies like bricklayers, this stability can be particularly valuable. Your income might vary between projects, so knowing exactly what your mortgage repayment will be each month helps with budgeting and financial planning.

When you access Home Loan options from banks and lenders across Australia through Tradie Home Loans, you'll find various fixed rate products designed to suit different financial situations.

The Benefits of Fixed Rates for Tradies

Fixed interest rates offer several advantages:

• Predictable repayments: Your monthly payment stays constant, making it easier to manage your budget around project work
• Protection from rate rises: If interest rates increase, your repayments won't change during the fixed period
• Clearer planning: You know exactly how much you'll pay, helping with long-term financial planning

However, it's worth noting that if variable interest rates fall, you won't benefit from lower repayments during your fixed period. You also typically have less flexibility with features like offset accounts during the fixed term.

Making Extra Repayments Work for You

Here's where things get interesting for tradies. When you land a big job or have a particularly good month, making extra repayments on your home loan can save you thousands in interest over the life of your loan.

Even an extra $50-100 per week can make a significant difference. For example, on a $400,000 loan amount with a 6% interest rate over 30 years, paying an extra $100 weekly could save you over $150,000 in interest and cut about 8 years off your loan term.

How Extra Repayments Work with Fixed Loans

Most lenders allow you to make extra repayments on fixed rate loans, but there are usually limits. Common restrictions include:

• Maximum additional repayments of $10,000-20,000 per year without penalties
• Some lenders charge fees for excessive extra payments during the fixed period
• You typically can't redraw extra payments during the fixed term

Before applying for a home loan, discuss these limits with your broker to ensure the loan structure suits your repayment strategy.

Calculating Home Loan Repayments

When you're calculating home loan repayments, consider both your regular payment and potential extra amounts. Your borrowing capacity will be assessed based on your income, expenses, and financial situation. As a bricklayer, lenders will look at:

• Your average income over recent years
• Bank statements showing regular income deposits
• Any existing debts or financial commitments
• Your loan to value ratio (LVR) - the percentage of the property value you're borrowing

A lower LVR often means you'll avoid lenders mortgage insurance (LMI) and may qualify for interest rate discounts.

The Application Process for Tradies

The Home Loan application process for tradies involves some specific considerations. You'll need to provide:

1. Tax returns for the past two years
2. Bank statements showing regular income
3. ABN registration and business activity statements if you're self-employed
4. Proof of any ongoing contracts or regular work arrangements

Many brokers offer a streamlined application process specifically designed for tradies, understanding the unique nature of trade work and income patterns.

Getting Pre-Approved

Home Loan pre-approval is particularly valuable in today's property market. It shows sellers you're a serious buyer and gives you confidence when making offers. The pre-approval process involves a thorough assessment of your financial situation and borrowing capacity.

For bricklayers, getting pre-approved can help you understand your budget before you start house hunting, factoring in not just the purchase price but also stamp duty and other buying costs.

Fixed vs Variable: Making the Choice

When choosing between fixed and variable interest rates, consider your personal circumstances:

Choose fixed if:
• You prefer payment certainty
• You're concerned about potential rate rises
• You have irregular income and need predictable repayments

Consider variable if:
• You want access to features like offset accounts
• You prefer the flexibility to make unlimited extra repayments
• You believe rates might fall

Many borrowers choose a split loan, with part fixed and part variable, giving you some certainty while maintaining flexibility.

Home Equity and Your Future

As you make your repayments (especially with those extra payments), you build home equity - the difference between what your property is worth and what you owe. This equity can become a valuable asset for future property investments or business expansion.

For tradies looking to grow their wealth, using home equity wisely can open doors to investment properties or funding business equipment.

Whether you're looking at your first home loan or refinancing an existing one, understanding fixed interest rates and extra repayment strategies can save you significant money over time. The key is finding the right loan structure that matches your income patterns and financial goals.

Call one of our team or book an appointment at a time that works for you. At Tradie Home Loans, we understand the unique financial situations of bricklayers and other tradies, and we can help you find Home Loan options that fit your lifestyle and goals.