DO YOU HAVE A FIXED-RATE LOAN THAT'S COMING TO AN END?
Like many borrowers, you may have lucky enough to take advantage of the low, fixed interest rates that were available a few years back.
The Reserve Bank of Australia (RBA) has estimated that around 800,000 fixed-rate loans will end this year. If that includes your loan, now is the time to consider your options to help you navigate the transition to potential higher repayments.
Do your sums.
Variable interest rates have been rising since May last year after the RBA began the first of its nine recent rate rises. As you move your mortgage repayments from fixed to variable, and your monthly loan repayments follow suit, it’s wise to know how much extra you may have to pay each month and where you’ll find the extra cash.
Reviewing your budget now may put you in a better position when deciding what loan will suit you going forward to help you meet your repayments. Look at your income and expenses to see where you can cut back. Look for expenses that you can reduce or eliminate, such as subscriptions or memberships you no longer need, eating out, or unnecessary purchases. look for cheaper offers on big-ticket items like insurance and utilities.
Negotiate and stay, refix, or refinance.
One of the worst things you can do when rolling off a fixed-rate loan is to simply accept the variable rate your lender automatically provides.
Banks are notorious for offering attractive rates to ‘new-to-bank’ customers, and not their existing ones. This is how they make money from their ‘Back-book’ In the industry is often referred to as a ‘loyalty tax’.
Some banks are more negotiable than others. As an Etairos customer, we can talk to your lender and let them know you’re exploring your options and see if we can squeeze any extra discount from them to retain your business.
According to economists, further rate rises are expected in 2023 and, depending on your circumstances you might want the certainty of refixing your loan. You could also consider a split loan – where part of your loan has a variable rate, and the other part is fixed. This provides confidence with repayment and a little additional flexibility.
If your existing lender doesn’t come up with the goods then refinancing is an option. This may get you access to rates, features and cashbacks that banks offer new customers, and it can potentially save you thousands.
If you’re considering refinancing, you may want to act sooner rather than later. Pressure on house prices has seen valuations fall, it’s important to make sure you have enough equity in your home to refinance at the best rate.
Don’t hesitate to chat with us before your fixed rate ends. We can help you crunch the numbers, negotiate a new rate, and help with refixing or refinancing.
Acting early means we’ll have plenty of time to explore the options available to you and help you find a solution that will allow for a smooth transition.
Call Jaeneen on 0402 684 199 or Paul on 0466 886 252 to discuss