24 May Master the Transition: 5 Expert Tips for Exiting Your Fixed Rate

As part of our Finestream service, we are currently engaging in a thorough manual review of our clients’ loans that involve fixed portions or entirely fixed home loans. Providing our clients with a comprehensive guide on what to anticipate upon the expiration of their fixed rates holds significant importance to us. We are committed to assisting with valuable tips on how to prepare for forthcoming changes and potential additional expenses. Where possible, Finestream aims to alleviate the stress and added pressure that may arise from rising interest rates and the cost of living.

Here are 5 expert tips for exiting your fixed rate and mastering the transition.

1. Know your numbers

Conduct a review of your home loan now – understand what your repayments are likely to look like once you come off your fixed loan term. Consider making extra repayments or saving that money now so that you don’t feel the pinch.

2. Consolidate Debts

If you have a pesky credit card or personal loan, you could consider consolidating debts, which may reduce your monthly repayments and alleviate financial pressure. Before reviewing, it’s important to consider both the short-term and long-term implications of this.

3. Spending too much?

If the extra money really challenges your weekly or monthly budget, think about whether adjustments can be made in other parts of life to ease the pressure. Be conscious of what is going through your account – what can you cut out? Go back to basics. Pack your lunch. Enjoy a store-bought coffee every now and then, not every day!

‘Quick win’ ideas include reducing spending on takeaway food or eating out and canceling subscriptions for a few months. Make sure you keep on top of insurance and utilities to ensure you have a good deal – every bit counts!

4. Negotiate a better rate in advance

It’s important to be organized – get in touch with your broker or bank before you are due to roll over. We generally contact clients at least 6 weeks prior to the fixed rate expiry to allow plenty of time to shop the market and reconsider options. If you start this process on the day or just after the fixed rate expiry, it’s additional weeks you may be paying more than you need to.

5. Get your property valued and review your loan

Property values can impact your rate. If your Loan-to-Value Ratio (LVR) is 80% or below, you may be in for a better deal. As a general rule, the better the LVR, the lower the risk to the bank, and therefore the better the rate offered to you.

Set aside time to review your current loan and make sure it’s still the right one for you. Consider if you might fix your loan again, or if you will consider fully variable or a combination of both.

Frequently asked questions

Here are some frequently asked hot-topic questions from our clients:

When is it a good idea to lock in your interest rate?

No one can predict the future, so you can’t know what will happen to interest rates in one, two, or five years. But, it could be a good idea if your circumstances mean you’d prefer to know your repayments for up to 5 years and you want to lock in a rate.

What are my options when my fixed term ends?

When your fixed-rate interest term expires, you’ll have three options: re-fix, automatically roll onto a fully variable interest rate, or split your home loan. Before deciding, factors to consider are your circumstances, future financial goals, and current market trends as they could have changed.

How can I calculate my repayments based on interest rate changes?

View our home loan repayment calculator that allows you to calculate repayments based on any changes to your loan balance and interest rate. View here.

Our Promise to You

We are here for you. We will help you navigate the competitive and ever-changing mortgage landscape to find the right loan for you. We’ll go to bat and negotiate on your behalf, and we’ll make the process as simple as possible for you, geared up to deliver fast results. We’ll help you avoid pitfalls and find loan features that suit your personal circumstances.