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Your Fixed Mortgage Rate is Expiring. Now What? A Look at Refinancing

March 1, 2024

So, your fixed-rate mortgage is about to hit its expiration date. What next? It’s like that moment of anticipation when you’ve been waiting in the Taylor Swift Ticketek queue, expecting something (anything) good to happen—except, in this case, it’s all about finance. Fear not, though, because just like we’ve guided you through other financial milestones, we’re here to simplify the process of what happens when your fixed-rate mortgage expires and how refinancing can be your silver lining.

Navigating Refinancing: What to Expect

Refinancing isn’t just about securing a better interest rate (though that’s certainly a big part of it). It’s about optimising your financial position to save thousands of dollars and potentially shave years off your mortgage commitments. Let’s break down some common scenarios we encounter when clients consider refinancing:

Securing a Better Interest Rate: Your current lender might not be offering a competitive rollover rate from your fixed rate to a variable one.
Short and Medium-Term Savings: We crunch the numbers to show you how much you can save in the first year and over a three-year period with a refinance, factoring in all costs, rebates, and savings to give you a clear picture.
Stagnant Rates with Current Lender: If your current lender isn’t budging on discounts or rate adjustments, it might be time to explore other options.
Changing Circumstances: Whether it’s home renovations, a new vehicle, or other endeavours, refinancing to obtain cash out by increasing your loan limit is an option worth considering.
Investment Opportunities: Transitioning from an owner-occupied loan to an investment loan, or vice versa, to accommodate new property purchases can be facilitated through refinancing.

Separating Myth from Reality: What’s Really Happening in the Market

In a media landscape filled with fear-mongering about fluctuating rates, it’s essential to grasp the reality of the situation. While variable rates have seemingly stabilised, indicating a potential peak in the rate cycle, predictions suggest a likelihood of rate reductions by the end of 2024, with further decreases over the subsequent years. This gradual decline contrasts sharply with the rapid rate hikes we’ve witnessed, hinting at a settling around the 5% mark in the near future.

Key Benefits of Refinancing: Making the Most of Your Options

The benefits of refinancing extend beyond just securing a lower rate. It’s about unlocking opportunities that align with your financial goals, such as:

Reducing monthly repayments
Removing a guarantor
Accessing refinancing rebates
Increasing loan limits for future endeavours
Leveraging features like redraw facilities and offset accounts

Fixed vs. Variable: Which Path to Take?

While fixed rates were once a popular choice, the current market climate leans heavily towards securing lower rates through variable options. However, the decision ultimately depends on your individual circumstances and goals. We’ll help you navigate this decision by analysing factors like potential savings, borrowing capacity, and long-term financial implications.

Dispelling Misconceptions: What You Need to Know

Despite the benefits, there are common misconceptions about refinancing. For instance:

Refinancing isn’t always the best option; sometimes, sticking with your current lender yields better results.
Clients may overlook additional costs like lender’s mortgage insurance (LMI) when refinancing.
Contrary to popular belief, refinancing doesn’t always come with out-of-pocket expenses, especially with available rebates.

Have Questions? We Have Answers

Navigating the world of refinancing can be daunting, but you don’t have to go it alone. Our team is here to address any concerns and provide tailored solutions that align with your financial objectives. Whether you’re aiming to reduce repayments, access equity, or explore investment opportunities, we’ve got you covered.

Appointments with Connected Finance come to you at no cost, so you don’t have anything to lose by booking a time to chat with our team and learn more about your home loan options.