Are you one of the many homeowners who will soon be facing a rate hike as their fixed rate period comes to an end? If so, waiting until your fixed rate period ends and your loan reverts to a high variable rate can cost you big-time, with rate hikes of 3 or 4% not uncommon. For many homeowners, this can add up to thousands of dollars in extra interest payments over the life of their loan.
When a fixed-rate period ends, your loan will automatically revert to the lender's standard variable rate (SVR), which can be much higher than the fixed rate. This can be a costly mistake, especially if you are on a tight budget.
How to Avoid High Variable Rates
The best way to avoid high variable rates is to talk to your broker well before the fixed term expires so that he/she can negotiate a good low rate with your lender before it’s too late. By doing this, you could save yourself a significant amount of money over the life of your loan.
Other Ways to Keep Your Interest Payments Down
In addition to talking to your broker, there are other things you can do to help keep your interest payments down:
Pay more than the minimum repayment amount
Paying more than the minimum repayment amount each month can help you to pay off your loan more quickly, reducing the amount of interest you have to pay over the life of your loan.
Consider a split loan
A split loan allows you to divide your loan into two or more parts, with one part on a fixed rate and the other on a variable rate. This can help you to balance the security of a fixed rate with the flexibility of a variable rate.
Consider an offset account
An offset account allows you to use your savings to reduce the amount of interest you have to pay on your loan. By keeping your savings in an offset account, you can effectively reduce the amount of interest you have to pay on your loan.
Shop around
Your broker will have access to a wide range of lenders and products and will be able to find the best deal for you. They will also be able to advise you on any fees and charges associated with switching lenders and help you to understand the terms and conditions of your new loan.
If your lender won't offer you a competitive rate, your broker can help you to refinance to a new lender. This involves moving your loan from your current lender to a new lender who is offering a better deal. This can be a complex process, but your broker will be able to guide you through it.
Don’t Wait!!! Talk to us Now
If you're looking for help with your home loan, why not talk to John MacMaster at Finance First, a mortgage broker in Rockhampton with 25 years of experience. John has helped many homeowners with their loans by finding the best deals and negotiating with lenders.
With John's help, you can avoid the highly variable rates that can cost you thousands of dollars over the life of your loan. So why wait? Contact John today.