Interest rates have never been lower, and according to experts, they may even drop further. So is now a good time to refix my mortgage?
There’s no denying that low rates are great for convenience. But before taking any steps, it’s important to understand the bigger picture. What’s your financial situation? And what are your short and long-term plans? Here are some important things to think about.
Has your fixed-rate expired yet?
Most people choose to refix their home loan when their fixed-term agreement expires. Of course, you can refix your mortgage at any time, but keep in mind that breaking a fixed-term loan comes with a cost.
The solution? Only break your fixed-term mortgage if the interest savings you can get make the break fee worthwhile. If you’d like to discuss your options, we are here to help.
Your financial circumstances matter
Choosing whether or not to refix your mortgage isn’t just about rates and fees, or savings and costs. You’ll also need to consider your financial situation. Here are a couple of good examples:
- Are you planning to sell your house anytime soon? Then fixing for a short period of time may be an option, to avoid having to pay a break fee when you sell.
- Has your income changed (or is about to)? This may be an opportunity to pay off your mortgage faster, by contributing a lump sum or increasing your payments. If so, re-fixing might not be the best option, as fixed rates don’t allow you to make extra repayments…
Of course, these are just two (of the many) personal circumstances that could affect your decision. Everyone is different – so if you’d like to discuss the particulars of your situation, please don’t hesitate to contact us.
Fixed or floating: there are pros to both
While securing the lowest interest rate possible can save you money, fixed rates have their downsides too.
As we mentioned before, if you had some extra funds to put towards your mortgage, a floating rate would allow you to do that with no penalty (unlike a fixed rate). Plus, if rates went down, you would automatically pay less in interest on your home loan. And if you ever decided to switch to a more attractive rate, or sell your property, there would be no break fees.
Having said that, there are also valid reasons to fix or refix. Generally speaking, in today’s lending environment, fixed-rate mortgages are lower than floating-rate mortgages – which can potentially save you money. Plus, rates may always increase; so if you’re looking for certainty of payment, fixing your rate can give you peace of mind.
As always, the choice largely depends on you, your goals, and your needs.
Thinking of refixing? Let’s talk
As your mortgage advisers, we are here to assist you throughout the lifetime of your mortgage.
So if you are looking to refix your home loan, please get in touch: we’d be happy to walk you through the pros and cons, while also working with a wide range of lenders to make sure you get the strongest rate possible.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek specialist advice.