They say all good things must come to an end, and unfortunately, that includes your fixed-rate home loan period.
If your fixed rate is about to expire, you might be wondering what happens next. Some people jump straight into research, while others put it off and hope for the best. But here’s the truth: the worst thing you can do is nothing.
When your fixed term ends, your loan will automatically roll over to your lender’s variable rate. Without action, this could mean much higher repayments. Now is the time to review your finances and make a plan.
What Happens When Your Fixed Rate Ends?
When your fixed rate comes to an end, it’s more than just a change in your mortgage; it’s a moment to review your entire financial situation. This is the perfect time to seek financial advice from a financial adviser or financial planner. By working with an expert, you can create a financial plan tailored to your individual financial goals, objectives and dreams for the future.
A financial planner will look beyond just your mortgage, considering everything from retirement planning and investment strategies to wealth solutions that support your long-term financial future. During your first appointment, you’ll have the opportunity to discuss your current financial products, explore new investment options and make sure every decision is in your best interests. Understanding the financial services guide and the advice process means you’re supported every step of the way.
With financial advice, you’re not just reacting to your fixed rate ending; you’re creating a plan to achieve your objectives and build a better future. Whether you’re looking to grow your wealth, prepare for retirement or simply want more confidence in your financial decisions, a personalised approach can make all the difference.
Step 1: Review Your Budget
Your home loan is likely your biggest expense, and a fixed rate expiry almost always means change. In today’s environment, that means higher repayments.
By reviewing your budget now, you’ll know if you can afford the increase or where you may need to cut back.
Step 2: Know Your Financial Situation
If your income has changed (e.g., job loss, reduced hours, or parental leave), refinancing may be harder. In this case, you may need to stick with your current lender’s terms. Changes in income can impact not just you but your family, so it’s important to consider their needs in your financial planning.
- If you have surplus cash flow, a variable rate loan may be better, giving you more flexibility to pay down debt faster.
- If money is tight, a new fixed rate may provide peace of mind, so you can budget with certainty.
Understanding your situation and your future goals will help you decide which path is best for you. When choosing between fixed and variable rates, assess your risk tolerance to make sure your decision matches your comfort with potential changes in repayments. Consider the taxation implications of any changes to your loan or financial situation, as these can impact your overall financial outcome. Also, review your insurance coverage to make sure you and your family are adequately protected. If you have surplus cash flow consider investing as part of your broader financial strategy. For complex situations seek personal advice from a qualified professional.
Step 3: Look at the Market
No one can predict the future but it’s worth keeping an eye on what’s happening with the economy, housing markets and interest rates. Are they trending up or down?
- If rates are expected to rise lock in a new fixed rate.
- If rates look like they may fall a variable loan may give you flexibility to benefit.
Remember changes in interest rates can also impact your broader investment portfolio not just your mortgage.
Step 4: Get Clear on Your Options
When your fixed rate ends you’ll typically have two main choices:
- Re-fix your loan for a new period
- Switch to a variable rate
This is also the time to compare lenders. The banking sector offers a wide range of mortgage products and services so it’s important to review all your options. Don’t assume your current bank is offering the best deal. When dealing with lenders be proactive in negotiating terms to get the best rate. Call them and ask for a rate review, let them know you’re refinancing. If they won’t match the market it may be time to switch.
Step 5: Speak with a Mortgage Broker for Personalised Financial Advice
If it all feels too hard you don’t have to do it alone. A mortgage broker can:
- Review your situation and goals
- Compare rates and lenders
- Structure your loan
- Manage the refinance process for you
They’ll make sure you’re not just rolling over into whatever your bank offers, but choosing the option that’s right for you.
The Bottom Line
A fixed rate expiry doesn’t have to be stressful, it can be an opportunity to take control, get a better deal and set yourself up for the future.
If your loan is coming off a fixed rate now is the time to act. Review, research and get advice.
At Insight Wealth Planning we work with trusted mortgage brokers and lenders to help our clients make good financial decisions.
Get in touch with our team today.