Remortgaging This Year? Fixed vs Variable Rates
Do you hold one of the fixed rate COVID-era mortgages coming to an end this year? Unfortunately, the rate has risen significantly since then. We can’t offer generalised advice without understanding your situation in detail. So contact us for personalised help. Remember, we are here to help. We’ve seen it all before, and our specialised and expert knowledge is here to be utilised — before you get stuck facing a large interest rate hike.
What happens when your fixed rate mortgage expires?
Your home loan will typically revert to your lender's standard variable rate. This may sound like the easiest option to take, especially if your situation has changed. But these rates can often be higher than other deals on the market. So instead of taking a back seat, let us review your options and start preparing.
First, create a buffer
Before your fixed rate expires, let’s work out what your repayments would look like when you roll off the fixed rate. How does this fit into your current budget? You might need to review non-essential costs.
Let’s look at the differences between a fixed rate or variable rate mortgages:
Fixed Rate Mortgages
- With a fixed rate, your monthly repayments will stay the same throughout the fixed term.
- You're shielded from potential increases in interest rates during the fixed term but also won’t benefit if they drop.
- Fixed rates may be higher than introductory variable rates, but they offer the stability of predictable repayments.
- Fixed rate mortgages often don't come with features like redraw facilities or the ability to make extra payments without penalty.
- Breaking a fixed rate mortgage before the end of the term can incur significant fees.
Variable Rate Mortgages
- Variable rates can start at lower interest rates than fixed rates, potentially leading to lower monthly repayments.
- Your interest rate and monthly repayments can change if the market changes, or your lender's rates change.
- Variable rate loans may offer features like redraw facilities, allowing you to access funds without penalties.
- You can benefit from any future interest rate cuts.
- The unpredictable nature of variable rates can make it harder to budget accurately.
Consult with a Mortgage Broker
We can help you compare different loan options and choose the one that best suits your needs. We have access to products not seen on ‘compare the market’ websites. We can secure unique rates based on your individual needs. Chat with us today to see what’s possible for you.
SPEAK TO AN ADVISER
Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.
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