Beat the Fixed Rate Mortgage Cliff

As an Australian homeowner, you may soon face a daunting challenge – the end of your fixed rate mortgage period. The Reserve Bank of Australia (RBA) is predicting that approximately half of borrowers with fixed-rate mortgages will transition to variable rates this year. It’s crucial for these homeowners to take action now to avoid potential increases in monthly repayments.

Thanks to historically low-interest rates in 2020–2021, savvy borrowers locked in fixed rates for 1–5 years. These fixed rate periods are coming to an end and the likelihood of a higher revert rate being applied to their home loan is a cause for concern. With the current cash rate at 4.1%, the impact on monthly repayments will be substantial.

What happens when my fixed rate expires?

When your fixed rate expires, your home loan will usually revert to a variable rate offered by your lender. While this approach seems hassle-free, it often leads to a higher revert rate compared to other variable rates on the market. Taking proactive steps before your fixed rate ends is crucial. Consulting a knowledgeable mortgage broker at least a month in advance can set the wheels in motion for refinancing and finding more favourable loan terms.

What do I do now that my fixed rate is ending?

If you’re among the many Australians approaching the mortgage cliff, refinancing could be your best bet to avoid a sudden increase in repayments. While rising interest rates may make higher repayments unavoidable, being prepared will shield you from any unpleasant surprises. Now is the ideal time to critically assess your current home loan and consider necessary adjustments.

When refinancing, it’s important to think about your preferences and financial goals. Ask yourself:

    • Do you want the flexibility to make unlimited additional repayments on your mortgage?

    • Do you value the predictability of knowing the exact monthly repayment amount?

    • Are you comfortable with fluctuating interest rates?

    • Do you require additional features like an offset account or redraw facilities?

    • Are you satisfied with the services your current lender provides?

    • Do you have other debts you want to consolidate through refinancing?

    • Would you like to explore the options of shorter or longer loan terms?

NMC Finance can help!

After carefully considering the above questions and evaluating your financial position, it’s time to contact your trusted mortgage broker – NMC Finance. We specialise in helping Australians transition from fixed-rate home loans to more advantageous options. Our team will meticulously explore the available options and connect you with lenders offering the best deals. We ensure that the savings over the life of the loan outweigh any associated costs and that the new monthly repayments fit comfortably within your budget.

The end of your fixed-rate mortgage period doesn’t have to be a cause for alarm. By being proactive and partnering with NMC Finance, you can navigate the transition with confidence. Refinancing provides an opportunity to secure more favourable loan terms, potentially saving you significant amounts over the long term. Don’t let the mortgage cliff catch you off guard – take control of your financial future and contact NMC Finance today to refinance and secure a brighter tomorrow

* This blog is intended for general informational purposes only. For personalised advice tailored to your unique financial situation, please contact NMC Finance.

FREE Guide to Building a Property Portfolio

Download our FREE GUIDE and learn everything you need to know from How to Start, Find, Afford, Grow and the Risks Involved in Building a Property Portfolio.