If your fixed rate is due to expire in the next few months, now is a good time to start thinking about your options, keeping your plans top of mind.
At the moment, most economists expect that mortgage rates will continue to increase in the near future. How high they will go, and for how long, is impossible to predict – and that’s just one of the key considerations when choosing your interest rate and whether or not you will opt for a fixed rate.
Generally speaking, fixing your mortgage rate can be a good idea if you’re looking for certainty of payment. Short term fixed rates are usually lower than floating rates, while longer fixed rates are usually higher but are designed to give you more certainty.
On the other hand, a floating rate gives you more flexibility if you’re planning to sell your house soon and/or would like to make unlimited extra repayments, as you won’t incur a break fee.
As you can see, there’s a lot to think about. If you’d like to discuss your options, please don’t hesitate to contact us. While the choice is entirely up to you, we can help you understand the pros and cons of re-fixing for longer or shorter periods.
Importantly, we can show you how to pay your mortgage off faster, for example by paying a little extra each fortnight. There may also be an option to split your mortgage into both fixed and floating rate portions, to get the ‘best of both worlds’. Get in touch to learn more.
To work out if breaking and refixing is for you, you need to consider how much you are (or are not) going to save on mortgage payments if you break. If the current fixed-rate is higher than what you’re paying now, your mortgage payments will be higher as well – but they could be even higher in a year’s time if you didn’t fix now at today’s rates and rates increased before your fixed rate expires.
Also, how much is the break fee going to be and can you afford to pay the break cost upfront? These calculations are quite complicated, so if you’d like to get a clear understanding, get in touch: we can help you request your lender to provide an estimate of the total break cost.
Get in touch. As mortgage advisers, we’re here to help you make informed decisions about your mortgage structure and repayment strategy.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
Link Financial Group Ltd trading as Mortgage Link and Insurance Link FSP 696731 holds a licence issued by the Financial Markets Authority to provide financial advice. Please visit https://mortgagelink.co.nz/available-disclosure/ for more information and Disclosure information.