Blog Article

When your mortgage is coming up for refixing, it’s a chance to evaluate your financial situation and take advantage of what’s happening currently with rates continuing to fall. Lower rates can reduce your monthly repayments, but there are several key steps to consider to make the most of this opportunity.

1. Don’t Rush Into a Decision

While falling rates may tempt you to lock in a new rate quickly, it’s important to take your time. Refixing your loan is an important financial decision that can impact your long-term financial situation. Evaluate all your options first as committing to a fixed rate early could mean that you miss out if that rate drops before your due date of renewal.

2. Consider Fixing for a Shorter Term

Since rates are falling, it might be tempting to fix your loan for a longer term at the current lower rate. However, if rates are expected to continue falling, fixing for a shorter term (e.g., 6 months or 1 year) might give you the flexibility to refix again at potentially lower rates in the near future.

3. Assess Your Financial Goals

Refixing is a good time to reassess your financial goals. Are you looking to pay off your mortgage sooner, or do you want to lower your payments to improve cash flow? Align your refixing strategy with your financial objectives. For example, you might decide to split your mortgage between a fixed and floating rate to take advantage of both or keep what you are paying on a higher rate to reduce the overall term of the loan.

4. Consult with a Mortgage Adviser

Our Mortgage advisers can provide expert insights into market trends, lender options, and strategies tailored to your specific financial situation. They can help you compare rates, negotiate better terms, and even explore alternative solutions like offset or revolving credit mortgages to further reduce interest costs.

5. Weigh the Benefits of a Floating Rate

With rates on a downward trend, you might want to consider a floating rate. Although floating rates can be higher than fixed rates initially, they allow you to take advantage of further rate drops without being locked into a fixed term. If your financial situation is flexible enough to handle the potential fluctuations in repayment amounts, a floating rate might be a smart option especially with offset options that Banks can offer.

6. Use Extra Funds to Reduce Your Principal

Falling interest rates mean your loan repayments may decrease. Instead of lowering your monthly payments, consider maintaining your current repayment levels. By doing so, you’ll be paying off more of your principal, reducing your overall loan balance faster and saving more on interest over time. This could include using surplus funds on hand in savings to make a lump sum payment with interest rates in savings and term deposits also falling.

7. Monitor the Market

The interest rate market can change quickly, especially during periods of economic uncertainty. Keep an eye on rate trends and central bank announcements that could affect future movements. This will help you decide the best time to lock in a new rate.

Many Banks have online rates that you can refer too for what they offering that are live.

8. Plan for Future Rate Increases

While rates may be falling now, it’s important to remember that they can rise again in the future. Consider how higher rates might impact your budget later on and plan accordingly. Building a financial buffer or paying down more of your mortgage while rates are low can protect you against future rate hikes.

Conclusion

When rates are falling and your loan is up for refixing, you’re in a great position to make decisions that can benefit your financial health. Take the time to evaluate your options, seek advice, and align your mortgage strategy with your overall goals. Whether you opt for a short-term fix, floating rate, or a mix of both, the right approach can save you money and offer flexibility in the years ahead.

Our Advisers are at the ready to assist you through this process so feel free to reach out for some guidance.