A fixed interest rate can make a big difference to the regular payments you have to make towards your loan! But unfortunately, a fixed-rate term won’t last forever.
By planning ahead and learning what to do when your fixed rate expires, you can take control of your financial situation. This can help you budget effectively and ensure that you can still service your loan, even if your interest rate rises.
Is your fixed rate about to end? Here’s what will happen when it does and what you should do to prepare yourself and your property.
What happens when your fixed-rate period ends?
In most cases, when your fixed term ends, your home loan will automatically revert to the standard variable rate offered by your lender.
The challenge is that this rate may be much higher than what you’re used to paying based on the interest required during your fixed term. This could be because your lender’s standard rate is not their best rate. It could also be impacted by the national cash rate.
What should you do before the term expires?
You don’t have to do anything while waiting for your fixed term to end if you’re happy for your loan to automatically roll over to your current lender’s standard variable-rate loan package.
However, this might not be the best solution. In fact, it could mean that you end up paying much more than you have to for your loan.
If you’re interested in exploring other loan options, now is the perfect time to get started. If possible, it’s a good idea to start looking for a more competitive offer 3 months before your fixed term is due to end.
Can you extend your fixed term?
Maybe! But it’s unlikely. If you’re interested in extending your fixed term, the best approach is to contact your lender well in advance. This way, you can discuss your options and make a choice before your fixed term runs out.
While your lender is unlikely to allow you to fix your interest rate again at the same amount you have been paying, you should be able to fix it again at the current rates your lender is offering. It’s important to shop around and compare loan packages to determine whether or not this is financially viable for your situation.
Choosing the right loan package
If you’re still unsure of which loan package to choose, an experienced mortgage broker can help you navigate the complexities of the market and compare what a wide variety of lenders, big and small, are offering.
The right loan package for you will depend on your goals, needs, and financial situation. This is why it’s a good idea to plan ahead, leaving yourself with enough time to explore all your options and choose a pathway that takes your individual circumstances into account.
Get help navigating your home loan by talking to the experts! Contact the team at Our Top 10 to find the best mortgage broker Sydney has to offer.
