02 Nov Extra costs when you roll off your fixed interest rate

Freaking out about rising interest rates? If you’re currently on a fixed rate, it’s important to know the extra costs for when you roll off your fixed rate.

Last year, fixed lending made up over 40% of the total mortgage market. So as you may start to roll off your fixed rate mortgage it’s worth knowing what your repayments may look like.

If you are on a fixed rate, what could it look like when you roll over to a variable rate?

The average home loan in SA is currently $462, 000.

If you have a fixed interest rate sitting at 1.99%, your repayments will be $1706.00 per month.

Let’s imagine you roll over to a variable rate, which currently sits at 4.99%, your monthly repayment jumps to $2,477.00, that’s a 45% increase of $771 per month.

This is enough to stress almost anyone out so its important to think about what changes we can make as early as possible.

Here’s some ideas of ways you can prepare for the increase.

UNDERSTAND WHAT A RATE INCREASE WILL MEAN TO YOUR REPAYMENTS

Know the numbers! Understand what a rate increase will mean to your repayment. Our Loan Repayment Calculator is helpful to forecast what your repayments would be.

REDO YOUR HOUSEHOLD BUDGET

With the increase to your repayments in mind, redo your budget to see where you can save money and make the choice to pay extra to your mortgage repayments.

START PAYING EXTRA NOW

Ensure you are paying principal and interest on your home loan. If your loan is fully fixed – be aware of any limits applicable for additional repayments.

SET UP YOUR HOME LOAN REPAYMENTS TO WEEKLY OR FORTNIGHTLY

By setting up weekly or fortnightly home loan repayments you will have at least one extra repayment per year, saving on interest.

GET THE BEST DEAL – REVIEW YOUR HOME LOAN

Make sure your loan has been reviewed in the past 2 years. Did you know we saved our clients over $50k over the last couple of months by reviewing their current home loan rate? Get in touch if you would like us to review your home loan.

It can feel overwhelming in the current financial climate, but we encourage you to make smart decisions and save money where you can.

Do you need help with your home loan? Contact Finestream today!