Fixed Interest Rates Expiring: Now’s the Time to Act!
We are at a critical time in the interest rate cycle. For many homeowners, the era of low interest rates in the 3% range is coming to an end, with current rates hovering around 6.5-7% or higher. This significant increase will undoubtedly impact your mortgage repayments, potentially straining your finances.
Understanding the Impact on Your Mortgage
Transitioning from a 3% interest rate to over 6.5% can substantially increase your monthly mortgage repayments. It's essential to understand how these changes will affect your budget. You can use our Mortgage Calculator tool to experiment with different figures and interest rates to see what your new repayments might look like. Or contact our mortgage brokers to find out the latest rates being offered by New Zealand banks and non-bank lenders.
Exploring Your Options
Now is an excellent time to get in touch with our mortgage brokers to explore your refinancing options. Switching lenders or renegotiating with your current bank could result in lower interest rates, cash contributions, or a restructured home loan that better suit your needs.
Options to consider include:
Interest-Only Payments: Reduce your monthly mortgage repayments temporarily.
Restructuring Your Loan: Adjust the terms to better fit your financial situation.
Exploring Cash Contributions: Some lenders offer cash incentives to switch.
Finding Lower Interest Rates: Shop around for the best deal.
The Role of Fixed Interest Rates
Most homeowners opt for fixed interest rates, locking in a rate for periods between 6 months to 5 years. This strategy provides protection from further rate increases and allows for predictable monthly mortgage repayments, making it easier to budget.
However, it's crucial to consider what your future plans are. If you decide to break a fixed rate term - whether due to selling your home, refinancing, relocating for work, or taking advantage of lower rates - you may incur early repayment fees.
A major decision for homeowners is determining the length of the fixed term. Consider the following:
Future Lump Sum Repayments: Plan your fixed rate maturity to coincide with any expected lump sum repayments to avoid break fees.
Interest Rate Predictions: Try to anticipate future interest rate trends. While no one can predict the market perfectly, having a strategy can save you money in the long run.
Variable Interest Rates: Flexibility with Caution
Variable interest rates offer flexibility, especially if you plan to make lump sum mortgage repayments or repay the loan in full within the next year. However, these rates can fluctuate, leading to potential increases in your monthly payments. Typically, variable rates are higher than fixed rates, so consider your financial stability and future plans before opting for this type of loan.
Get Expert Advice
Navigating the complexities of mortgage refinancing and renegotiation can be challenging. But that’s where we come in! When you work with our mortgage brokers, you benefit from our 20 years’ experience, as well as personalised advice tailored to your specific financial situation. We can help you weigh your options, understand the implications of different terms, and secure the best possible deal for your home loan.
Don’t let rising interest rates catch you off guard - we're here to ensure you get the best possible terms for your home loan.
Get in touch with our mortgage brokers today to start the conversation.
Our blog is not intended to be taken as personal advice and is for informational purposes only.
Before acting on this information, contact our mortgage broker to ensure it is suitable for your circumstances.