Is It Time to Fix Your Interest Rates or Refinance?

There is no doubt that there is a climate of uncertainty in Australia at present, cheap interest rates, both variable and fixed rates have become increasingly attractive.

For most people their mortgage is a very large financial obligation, it is usually the largest and most costly financial decision of their life. Careful consideration and regular review are critical components to getting the most from your mortgage.

At each review you should ask yourself whether the loan and structure you have is working for you, whether you have achieved your financial objectives and how you can improve on those objectives.

Fixing your loan, it is only one aspect to consider at each review milestone you set for yourself. Ideally these should be every twelve months or so for variable rate loans and three months before the expiry of any fixed rate loan. Alternatively you should review your loan when there are significant movement in the market place such as we have now.

Some people opt for a 50: 50 split, 50% of the loan value variable and 50% fixed. Part fixed, part variable is in itself it’s a valuable approach for some people. There are only two reasons to consider splitting between fixed and variable. The first is that you are a good saver and want accessible offset facilities, which can be hard to find amongst competitive fixed rates. The second is that you only want partial protection against rate increases.

You should, however remain mindful of the serious limitations of fixed rate loans before you race to sign on the dotted line. In particular check to ensure what limitations apply to extra payments and redraw.

Regardless of whether you choose a fixed rate mortgage or not, how you arrange your loan and the features you choose will have a significant impact on your finances and your life, whether you notice it or not.

A financial mortgage broker, like Intercorp Financial Strategies, has a comprehensive understanding of the market place. With access to 30 different lenders and over 300 products we can make sure that we select the best product for your circumstances.