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Fixed Rate Mortgage Expiring, Now What?
They say all good things must come to an end… and that includes your home loan fixed interest rate period. If your fixed rate expiry is approaching, you might have started to ponder about the next steps and the necessary actions to ensure a smooth transition. Conversely, you might be tempted to ignore this impending change. A word of caution – taking no action could lead to unintended financial complications.
Time to Review Your Finances
When your fixed interest period is nearing its end, it signals an opportune moment to reassess your finances. Let’s discuss a few key steps:
Revisit your budget: A fixed rate expiry will inevitably result in an adjustment to your home loan repayment – often one of the largest monthly expenses. Particularly in a rising interest rate environment, your revised repayment might be higher, requiring careful budgeting. By revisiting your budget, you can plan for the new home loan repayment amount and make necessary spending adjustments.
Understand your current Financial Situation
Your financial situation plays a critical role in determining the options available to you post-fixed rate expiry. Recent changes to your income position, such as a job loss, reduction in salary, or a maternity break, might affect your ability to refinance your loan. This could potentially leave you stuck with your current lender on less-than-ideal terms. On the other hand, if you have surplus cash flow that you wish to utilize in debt reduction, a variable rate loan might be a more suitable choice, providing more flexibility with repayments. Alternatively, if cash flow is tight, the predictability of a fixed rate loan can offer financial stability, ensuring your repayment amounts won’t increase during the fixed rate period.
Keep an Eye on Market Conditions
One significant factor to consider when deciding between a fixed and variable interest rate is the current market landscape. It’s crucial to keep tabs on the economy, housing markets, and interest rate trends. Ask yourself: Are interest rates trending up or down? What could the market trends mean for both fixed and variable interest rate loans?
Evaluate Your Options
As your fixed interest term expires, you will need to decide between either re-fixing your loan for a period or switching to a variable interest rate loan. This crossroad also presents an excellent opportunity to review your existing loan provider against other potential lenders to ensure you’re getting a competitive rate. Armed with market research, initiate a conversation with your existing lender to negotiate a rate review. Let them know you’re considering refinancing your loan and inquire about the best rate they can offer. If they aren’t willing to present a competitive rate, it might be time to explore other lending institutions.
Seek Professional Guidance
Navigating your fixed rate expiry may seem daunting, but remember, you don’t have to journey alone. A qualified financial adviser can provide valuable assistance throughout the process. They can help determine the best course of action based on your budget, financial situation, and market trends. So why wait? Contact your financial adviser today and take the first step towards navigating your home loan fixed interest rate expiry with confidence!