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Preparing for Higher Home Loan Repayments: Your Action Plan for Transitioning from Fixed to Variable Rates

In light of the fact that two-thirds of low-rate fixed interest rate loans are transitioning into standard variable interest rates this year, it is wise to start preparing now. To help you navigate the potential increase in home loan repayments when your fixed term ends, we have put together an action plan that incorporates refinancing, buying a property, property investment, loan, and mortgage broking.

Take proactive measures with your loan

To effectively prepare for the rise in mortgage repayments, it is essential to be proactive and take action regarding your loan well before your fixed term ends. Allowing your loan to automatically transition to your lender’s standard variable rate may not present the most competitive deal for you. This is because:

  • Lenders often reserve their most favorable rates to attract new customers.
  • Your lender is unlikely to inform you about cheaper alternatives available with their competitors.

Rather than allowing your loan to revert, carefully consider your options. It is worthwhile to conduct thorough research and have a discussion with us to determine which type of loan—fixed, variable, or split—will best suit your needs and help keep your repayments manageable.

Seek assistance from a specialist

We highly recommend reaching out to a finance specialist at least three months before your fixed rate term expires. Consulting with a specialist regarding your home or investment loans can help you assess the appropriate course of action based on your specific circumstances. Our role entails conducting a comprehensive review of your existing finance arrangements and exploring the available options. Additionally, it may be beneficial to consult a financial adviser to ensure that your decision aligns with your long-term financial goals.

Evaluate your household budget

Before your fixed rate term concludes, it is crucial to review your household budget. This evaluation can help you identify potential avenues for saving money as your home loan repayments begin to rise. If you can identify areas in your budget where spending can be reduced, now is the time to take action and make adjustments to accommodate the upcoming increase in mortgage repayments. While cutting back on everyday expenses such as groceries and petrol may be challenging due to the high cost of living, you can explore negotiating better deals with your electricity, internet, and insurance providers, especially if you haven’t compared offers recently. Additionally, discretionary spending on items like takeaway food, entertainment, gifts, and impulse purchases can be reined in to free up some room in your budget.

Utilize the option of making extra repayments

If your fixed rate loan allows for additional repayments, it is worth considering this feature before your fixed term ends. By making extra repayments up to the fixed term cap, you can build a buffer for yourself in case of future interest rate hikes. This approach enables you to repay a greater portion of your home loan, which can prove beneficial when faced with potential challenges in meeting your monthly repayment obligations.

In summary, taking proactive steps, seeking professional guidance, reviewing your budget, and leveraging the opportunity to make extra repayments are essential actions to ensure a smooth transition when your fixed term ends. By incorporating these strategies and considering the keywords you provided, namely refinancing, buying a property, property investment, loan, and mortgage broking, you can navigate the changing landscape of home loan repayments more effectively. Contact us now and take control of your loan transition journey.