Mortgage interest rates have skyrocketed over the past two years, having a significant impact on many mortgage holders.
If your mortgage is due to expire off it’s low fixed term interest rate soon, you’re about to experience a significant increase in your mortgage repayments.
For example, if you have a $500,000 mortgage fixed at 2.99% pa with a remaining loan term of 28 years, that is due to expire, potentially you’ll be looking at an increase of around $260 per week.
How can I minimise the impact of rising interest rates?
- Speak with a Mortgage Adviser to review how your existing mortgage is structured. There may be better ways you could have your mortgage structured to minimise your exposure to interest rate increases. For example, by splitting your mortgage over various amounts and terms will reduce the impact on your household budget when your fixed term is up for review
- You could look to extend your mortgage loan term out to help reduce your regular mortgage repayments. This would require going through a Full Application process and it should also be noted that by extending your mortgage loan term, you’ll be increasing the overall amount of interest you’ll be paying over the life span of your mortgage
- You can look to secure an interest rate BEFORE your mortgage expires off its fixed term. Depending on which bank your mortgage is with, you can look to secure an interest rate anywhere from 60 days to 30 days prior to your mortgage expiring off its fixed term
- You could look to consolidate any high interest loans (eg. car finance loan) onto your mortgage, as mortgage interest rates tend to be lower. This will reduce and simplify your loan repayments
- You could look to try and pay off your mortgage faster, by doing any of the following..
- Making lump sum payments – either during your fixed term or at expiry of your fixed term. Please speak with a Mortgage Adviser to check if there are any penalty charges prior to making a lump sum payment
- Increasing your regular loan repayments
- If you’re currently making monthly loan repayments, look to change this to either weekly or fortnightly loan repayments, as this will mean you will make more repayments towards your loan during the year compared to monthly repayments
- If interest rates have decreased when your next fixed term expires, look to keep your repayments the same (as you’ll be used to paying this amount)
If you have an existing mortgage that is due to expire within the next 3 months, NOW is the best time to speak with a Mortgage Adviser.
Want to find out more?
The team at Wayne Henry Mortgages are available to chat anytime about your existing mortgage.