May 21, 2013
Locking in a fixed interest rate or switching lenders altogether is the great debate now with lenders adjusting their interest rates out of step with the Reserve bank’s cash rate.
It may be a good time to consider your options and look for a better deal from different lenders – not just the big four, but consider smaller credit unions or mutuals. You could consider using a mortgage broker whose relationships with many lenders may help pave the way to negotiating you a better deal.
When deciding which way to go, remember that interest rate shouldn’t be your driving force. Also compare fees for exiting your mortgage and the new loan’s initial and recurring costs, features, accessibility and flexibility.
Pondering fixed vs. variable? Ask yourself if you need the security of steady repayments and are happy with a more restrictive loan or whether you need a more flexible loan and can handle possible rate rises.
Also think about how you will feel if you lock in but then watch interest rates fall (always a possibility) and consider potential break costs for switching again during the fixed term.
There are risks and benefits with different loan types, just as there is with switching and with keeping your current loan.
A professional mortgage broker will compare your loan against hundreds of products. If it’s best you make a move, they then provide guidance through the loan selection, application and settlement process and beyond.