Is your fixed rate term about to end?
Those who managed to secure fixed rates at their lowest could be looking at a significant mortgage repayment increase depending on when their fixed term ends. This paired with rising living costs could leave many Australians stretched to their financial limit. To ensure that you and your family are prepared for this change, it’s crucial that you assess your home loan by speaking to us.
Unfortunately, there is no way to extend your current fixed rate mortgage at the same rate. If your rate is expiring soon, the best course of action is to be well informed. Take a good look at your current loan, assess whether it has been working for you, and take note of the features you currently use and benefit from, such as an offset account.
During this assessment, you will also need to factor in your individual circumstances and future plans. If your lifestyle or financial situation has significantly changed since you first signed on for your loan, you could be better suited to a different arrangement. Future plans, such as if you intend to sell your home or buy an investment property, could also inform what type of loan is best for you.
Once you have a thorough understanding of your current situation, you can begin to prepare for the moment your low rate fixed loan expires. The good thing about your fixed term ending is that you are no longer locked in and can consider changing lenders to get the best rate available. Here are a few options that could work for you depending on your circumstances.
If you prefer to have fixed rates and know exactly what your mortgage repayments are going to be each month, refixing your loan could be the best option for you. Get in contact with us, we will compare rates and find the best option for you. Keep in mind that you will need to pay a potentially costly break fee if you plan to sell or refinance within the fixed rate term.
A variable loan gives you much more flexibility when it comes to your repayments. For example, you can often opt for unlimited repayments, allowing you to pay off your loan at your own pace, and you can sell or refinance without needing to pay break fees. The downside is that your rate will rise with the market which can be unpredictable.
If you like the stability of a fixed rate home loan in Australia but also would like to take advantage of the features that can come with a variable rate, you can split your home loan between the two. Fixing a portion of your loan while leaving the rest variable can help you reduce the risk of rising interest rates without completely boxing you into a lengthy loan that may not work for you in a few years.
Another option is to do nothing at all. If you wait until your fixed rate home loan expires without making any changes, your loan will likely roll over to a variable rate. This could be a financially poor decision as you’re unlikely to secure a good variable rate without negotiation – so make sure you speak to us.
By far the most valuable thing you can do to prepare for your fixed term ending is to see what else is out there so contact us. Our team of award-winning mortgage brokers will use their experience and industry connections to find you the best option for your lifestyle, financial situation, and future plans.
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