1st apartment full

If you’re currently on a fixed-rate loan and the term is coming to an end, you’re going to have a few options to consider.

Coming out of a fixed term is usually a great time to review your loan with a mortgage broker so you can compare what the best options are for your current situation. Things can change in just a few years, so it’s worth examining your financial plan going forward.

Here are some potential options you can explore:

Refinance

When you refinance you are effectively paying out your old loan and taking out a new one. This doesn’t have to be another fixed-rate loan and you can compare the most suitable options with the help of your mortgage broker.

While it is important to consider both fixed and variable interest rate options, there are also a lot of other features that you could be looking at that might save you money. Things like offset accounts and access to other savings through credit cards can be beneficial, and these may not be available with a fixed interest rate loan.

Refix

With fixed interest rates rising, it could be time to consider a lower variable option. Alternatively, if you like the security of fixing your loan and knowing what your repayments are going to be, then you might appraise another fixed interest rate loan.

However, a key consideration will be how much flexibility you might need in the near term, as fixed-rate products are typically not that flexible. They often charge fees for additional repayments, or if you want to exit the loan. If your income has increased then you might not want to stay with a fixed-rate plan either. This is because you can look to pay down a lump sum and reduce the principal component of your loan.

Revert

When a fixed interest rate loan term ends, the loan will typically revert to a standard variable interest rate.

While this might be the type of loan you want to go with, the reverted interest rate might not be the lowest available and the loan features might not be what you need.

Before reverting, it is worth reviewing your options, goals and what type of flexibility and options you need from a home loan.

It might even be possible to obtain a lower interest rate by looking at different lenders, so it’s a good idea to assess your loan and compare potential options with your mortgage broker.