Stay ahead of the game, while many borrowers fixed their mortgage rates In 2020 and 2021, when fixed rates for home loans hit historic lows
However, many of these borrowers now face a hike in their interest rates as their fixed rate terms end.
With the cash rate target rising to 3.10% as of Jan 2023, variable rates are predicted to average at 5.41% for new borrowers and 5.85% for existing borrowers.
What can occur at the expiry of your fixed period, if you don’t actively manage your rollover, is an automatic roll into a standard variable rate. A standard variable rate could be in the order of 6% plus. We would encourage you to compare with market rates before the rollover.
Consider the following steps with a broker’s support.
Negotiate
Reduce your interest costs by negotiating with your lender. Don’t accept high roll-off rates, instead negotiate the best variable rate available. Your mortgage broker is your advocate in securing the lowest possible rate from your lender. Stay informed and explore other options if you find a better deal elsewhere. This keeps lenders competitive and saves you money
Refinance
Unlock savings with a loan refinance. If your current lender isn’t delivering, talk to your broker about finding a better deal with a different lender. Your broker can also help you customize your loan terms, potentially resetting it to a 30-year term or switching to interest-only payments for increased cash flow flexibility.
Take into consideration the following points with any refinance
Cost of Switching
Understand the full cost of a loan switch. While cashback offers may entice you to switch lenders, weigh the savings against the costs, such as discharge fees from your current lender and establishment fees with the new one. Your broker can provide a full cost breakdown and help you make an informed decision, taking into account your specific needs and loan structure.”
Discharge Time-frames
Stay ahead of the timeline with a loan refinance. Consider the discharge time for your existing loans when choosing a new lender. Different lenders have varying turnaround times. Talk to your broker about your expectations for a fast refinance and get the quickest discharge possible
Don’t Wait
Save now, even during the decision-making phase. Whether you’re considering refinancing or staying with your current lender, work with your mortgage broker to secure the best possible interest rate on your existing loan. Don’t pay more than you have to while you explore your options
Diversify your lending
Diversify your home loan strategy by combining fixed and variable rates. By splitting your borrowing between fixed and variable rates, you can benefit from the stability of fixed repayments while also taking advantage of any potential rate decreases with a variable rate. This approach helps spread your risk and provides a balance between certainty and flexibility. Your mortgage broker can help you determine the right mix of fixed and variable rates to suit your specific needs and goals.
Book your 15-minute lending strategy call to discuss how we can minimise your home loan rate and maximise your monthly cashflow
https://calendly.com/strategy-call-with-graeam/15min
