Fixed rate expiring soon? It's time to make a game plan.

If you’re currently playing the waiting game wondering what will happen when your fixed rate term ends, we understand what a stressful time it might be.

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 per cent 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 soon, now is the time to review your home loan and make a game plan.

Questions to ask when reviewing your home loan

As a first step, think about your current loan, your personal circumstances and goals.

• Is your loan working for you?
• Are you using any features such as offset accounts or redraw facilities effectively?
• Has your financial or family situation changed, and could this affect the type of loan that’s right for you?
• What are your intentions for the property (hold, sell, use the equity to renovate or buy an investment property)?

The answers to these kinds of questions may ultimately drive what you decide to do when your fixed rate expires.

What happens when my fixed rate ends?

As a FinancePath client we make it our priority to proactively reach out to discuss your options and address the abovementioned questions 4 weeks prior to your rate expiry.

Prior to this call we will proactively review your loan structure, interest rate and be ready to discuss the best path forward, dependent on your personal circumstances and future goals.

If you do nothing, your home loan will usually revert to your lender’s variable rate.

What are my options?

• Re-fix your home loan. With this option, you’ll know exactly what your repayments will be during the fixed term and can budget accordingly. However, you may be up for break costs if you end your fixed term early.
• Switch to variable. Variable rates may be lower than the proposed new fixed rates and there may be advantages such as loan features and unlimited repayment options to help you get ahead. But if the cash rate increases, your interest rate may rise too.
• 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 loan types.

Please note, it is important to understand that your personal circumstances and future plans need to be considered prior to locking in any of the abovementioned options. Speak to the team for guidance.

Can I extend my current fixed rate mortgage?

Unfortunately, not. However, you can fix your home loan at a new rate for a suitable term (typically between 1 to 5 years).

What if I re-fix then need to sell or refinance?

If you do fix your interest rate and need to sell or refinance, you may have to pay break fees.  

Break costs can be expensive. The amount you’ll be up for depends on a range of factors, including the loan amount, the time left on the fixed term and the interest rate at the time of breaking your fixed rate.

Once again it is really important to have a conversation to understand your options prior to selling or refinancing so the team can identify the best lending path for you moving forward.

We’re here to help

If you have questions regarding the expiry of your fixed rate or are considering your options when to comes to breaking you rate or fixing in the future, the best move forward is to engage our relationship management team on 1300 780 444 for guidance.

The team can review your current loan facilities and assist in providing you with the options available based on your personal circumstances.