When your fixed rate term ends, your loan typically reverts to the standard variable interest rate unless you’ve arranged to refix your loan. Fixed rate terms typically last between one and five years and are prearranged between you and your lender.
As your fixed rate term approaches its end, it’s important to plan ahead and talk to your mortgage broker about your options for refixing, repricing, or refinancing.
Repricing with your current lender
Repricing with your current lender can be an effective way to secure a more competitive interest rate. However, be aware that lenders may not apply their lowest rate when a loan reverts to a variable rate. It’s always a good idea to shop around and compare rates with different lenders.
If you find a better deal elsewhere, you can also ask your current lender to match it.
Refinancing to a different lender
Refinancing to a different lender can also be an option when your fixed rate term ends. While the interest rate is a key factor, it’s important to consider the true cost of switching, which includes fees and charges associated with setting up a new loan. If your loan-to-value ratio (LVR) is above a certain limit, typically 80% LVR, you may be required to pay Lenders Mortgage Insurance if you refinance.
At Clark Finance Group, we can help you understand the true cost of switching and how to save money on fees and charges. Contact us today to learn more.