When your fixed-rate mortgage term ends, it’s important to understand your options to ensure you’re making the best financial decision for your situation. Let’s explore what happens at the end of a fixed-rate term and how you can prepare for the transition.
Key Takeaways
Fixed-rate mortgage terms typically last 1 to 5 years.
When the term ends, your loan will usually revert to your lender’s standard variable rate (SVR).
You have options: refinance, negotiate a new fixed rate, or stick with the SVR.
Planning ahead can help you save money and avoid unnecessary stress.
What is a Fixed-Rate Mortgage?
A fixed-rate mortgage locks in your interest rate for a specific period, typically between 1 and 5 years. During this time, your repayments remain consistent, providing stability and protection against interest rate hikes. However, when this term ends, the fixed rate no longer applies, and the loan transitions to your lender’s standard variable rate unless you take action.
What Happens When the Fixed Term Ends?
At the end of your fixed-rate period, your lender will:
Notify you of the upcoming change.
Automatically switch your mortgage to their standard variable rate (SVR) unless you choose a different option.
The SVR can fluctuate with market conditions, making your repayments unpredictable and potentially higher than what you were paying under the fixed rate.
Your Options at the End of a Fixed-Rate Mortgage
1. Refinance Your Mortgage
Refinancing involves switching your loan to a new lender offering a better deal. This is an excellent opportunity to secure a lower interest rate, access better features, or consolidate debts.
2. Negotiate a New Fixed Rate
You can negotiate with your current lender to lock in another fixed-rate term. Lenders often offer competitive rates to retain existing customers, but it’s still wise to compare offers from other lenders.
3. Move to the Standard Variable Rate (SVR)
If you take no action, your mortgage will default to the SVR. While this provides flexibility (e.g., no fixed-term break fees), it’s generally not the most cost-effective option.
Why Planning Ahead Matters
Failing to plan for the end of your fixed-rate mortgage could cost you thousands of dollars in extra interest payments. Here’s how to stay ahead:
Review Your Mortgage Terms Early: Start reviewing your mortgage options at least three months before your fixed term ends.
Consult a Mortgage Broker: A broker can compare the market and find the best deals tailored to your needs.
Factor in Refinancing Costs: While refinancing can save money, consider costs like application fees, valuation fees, and legal fees.
How Proactive Lending Solutions Can Help
Navigating the end of a fixed-rate mortgage can be overwhelming, but that’s where we come in. At Proactive Lending Solutions, we:
Analyse your current mortgage to identify opportunities for savings.
Compare rates and products from a wide range of lenders.
Negotiate with lenders to secure the best terms for your next step.
With our personalised guidance, you can make confident decisions about your financial future.
Contact Us Today
Don’t let the end of your fixed-rate mortgage catch you off guard. Get expert advice and explore your options with Proactive Lending Solutions. Contact Shaun today!
Phone: 0424 513 740
Email: info@proactivelending.com.au
Website: www.proactivelending.com.au
Let’s secure the best solution for your needs!
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