RE-FIXING YOUR MORTGAGE ONLINE: Why It’s Important To Seek Advice Before You Lock it In.

The banks make it easy these days to refix your mortgage via their banking apps. Even though this might look like an easy and convenient way to lock in a new interest rate on your mortgage, you’re not going to know if you are actually getting the best deal on the new interest rate or not. By locking in a rate on your banking app you are also locking in a new contractual agreement with the bank that you will have to maintain for the rest of the fixed term.? If for some reason you need to break that contract in the instance you sell the property or switch banks, then you may be up for some “break fees” or early repayment costs that you weren’t aware of.? As with any contract you enter into, when it comes to refixing your mortgage it’s best to seek advice from a qualified Mortgage Adviser beforehand.

When your fixed rate is up for renewal you also want to take advantage while you aren’t locked into anything, to really optimise your loan structure.

If you didn’t do it right last time, or your financial situation has changed, then now is your chance to make sure that your new loan structure is fit for purpose – especially if you are having to move onto a higher interest rate.

Getting creative with your mortgage can actually save you some money in the long run. We can look at different scenarios to help optimise your mortgage such as the ones below:

Loan Splitting

Splitting your loan across different fixed rate terms is a good way to future proof yourself, so if interest rates go up, only a part of your loan will be affected and your monthly repayments won’t skyrocket too much. But, it’s also important not to choose a loan term that’s too long because then you might miss out on lower interest rates in the future. So finding a flexible balance is the name of the game!

Offset Mortgages

Another great way to lower your repayments is to utilise any money you may have sitting in your savings and everyday accounts to “offset” the interest payments on your mortgage. This type of loan is known as an offset mortgage. With an offset mortgage, the aim is to maximise the funds you have in your accounts each day to offset the balance on your mortgage.? As an example, if you have a $200,000 mortgage and $10,000 across your savings and everyday accounts with the one bank, they would only charge interest on the difference, which in this case would be $190,000.

There are only three banks currently offering this product so you need to make sure you have a chat with us to see if it’s suitable for you.? If you are not currently with a bank that offers this product, then now would be the time to get you properly sorted with one that does so you can truly put your money to work for you!

Refinancing

If you’re about to come off a low fixed rate and are worried at the thought of higher repayments, then refinancing might be a good option for you.

At the moment banks are offering some nice incentives when it comes to refinancing such as cashbacks or cash contributions. If you are going to struggle with the higher repayments then we can look to extend your loan term at the same time which can lower your repayments to give you some breathing space until interest rates reduce again or by having a portion on interest only.

Debt Consolidation

When your fixed rate loan is up for renewal and you have outstanding balances on credit cards, hire purchases or car loans (which are always at much higher interest rates than your mortgage), by combining these loans and consolidating them into your mortgage will help you to pay them off faster, saving you a significant amount of money in interest payments.

However, there is a trick to structuring this correctly to make sure you don’t end up paying MORE in interest, which an experienced Mortgage Adviser can guide you on.

Fees

If there are any potential fees like break costs, early repayment fees or cashback clawbacks we can make sure this is all covered before locking anything in.

So as you can see, Refix time is not a time to make a rush decision.?

If you start the process early – at least 60 days out from the fixed rate expiring, we have the best chance to get things sorted in time before the expiry date.

We can take care of all the legwork for you and negotiate on your behalf when it comes to getting the best deal out of the banks!

The best part of all is when it comes time to refix again in the future, we will remind you well in advance which makes a stress-less experience for all.

If you would like some advice around your particular situation then please don't hesitate to get in touch with us!