What to do when your fix rate expires.

What should I do when my fixed rate expires?

Is your home loan currently on a fixed rate that’s nearing expiry? If so, you may be wondering what you should do next.

Fixed rate borrowers have been temporarily shielded from the Reserve Bank’s cash rate increases, but for how long? It’s estimated that almost 40% of Aussies on low fixed rate loans will roll off them next year. This could result in a considerable increase in mortgage repayments for households that are already stretched with rising cost-of-living pressures.

If your fixed rate is expiring within the next three months, now is the time to review your home loan and make a game plan.

What are my options?

Once your fixed term ends, you can stay with your current lender or refinance to a new one. It is best when reaching the end of a fixed term to review the market in case there may be a better option available to suit your unique needs.

Whether you stay or switch lenders, you will need to decide on what interest rate structure you prefer. Your options are:

  1. Re-fix your home loan. With this option, you’ll know exactly what your mortgage repayments will be during the fixed term and can budget accordingly. However, if interest rates do go down, your fixed rate will remain the same and you will not benefit from any savings.
  1. Switch to variable. Variable rates may be lower than the current fixed rates on offer and there may be advantages such as loan features and unlimited extra repayment options to help you get ahead. This may be harder to budget around as there is no certainty on what your rate will be in future. If the cash rate increases, your mortgage repayments will rise too.
  1. Split your loan.This is when a portion of your loan is fixed and the remainder is variable, potentially allowing you to benefit from both types. Most lenders will allow you to dictate the ratio split to your preference.

Whilst there is still uncertainty on how much further interest rates will climb, we’re here to help you get on the front foot in the current environment.

We have access to all major lenders and private banks and will help you select a loan that best suits your unique situation.

Want to explore the right option for you? Get in touch with our lending experts today.