Fixed interest rate loan

A fixed loan offers a fixed interest rate for a specific period (eg. six months to five years).

At the end of the fixed rate period, the loan is renegotiated for a further fixed term or reverts to the variable interest rate current at that time.

It may not be possible to pay extra amounts off the principal without paying a penalty.

A penalty usually applies if the borrower wishes to refinance the loan during the fixed interest rate period.

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