Don’t Let Your Low Fixed Mortgage Expiration Sneak Up On You: Low fixed interest rates may seem like a dream come true for mortgage owners. After all, who wouldn’t want to lock in a low rate and enjoy predictable payments for years to come? However, the truth is that low fixed rates can sometimes be a double-edged sword. If you don’t act in time, your fixed rate could expire, leaving you with much higher payments than you bargained for.
This is why it’s crucial for Australian homeowners to understand fixed interest rates, revert rates, and how they work. In this post, we’ll explore the risks and costs of ignoring the revert rate and show you how to secure better mortgage rates before your fixed rate expires. Doing so could save thousands of dollars and avoid unnecessary stress.
Section 1: Understanding Fixed Interest Rates and Revert Rates
Fixed interest rates are mortgages that have a specified interest rate for a set period of time, usually between one and five years. This means that your payments will remain the same during the fixed period, regardless of whether interest rates rise or fall. Revert rates, on the other hand, are the variable rates that apply after your fixed-rate period expires. In other words, they are the rates that you will pay for the remainder of your mortgage term.
The main advantage of fixed interest rates is that they provide certainty and predictability. You know exactly how much your payments will be, and you can plan your budget accordingly. However, fixed rates also have their downsides. For example, they are often higher than variable rates, and if interest rates drop, you won’t benefit from the lower rates until your fixed period expires. Furthermore, if you fail to take action before your fixed rate expires, you could find yourself paying a higher revert rate than you need to.
Section 2: John’s Mortgage Scenario
To illustrate the risks of ignoring the rate revert, let’s take a look at John’s scenario. John took out a $500,000 mortgage with a fixed interest rate of 1.99% for 2 years. However, he failed to take action before his fixed rate expired, and his rate increased to the current standard of 7.19%. As a result, his monthly payments increased from $2,111 to $3595, a difference of $1484 per month or over $17,000 per year.
This may not sound like a huge increase, but over the remaining 23 years of his mortgage term, John will end up paying an extra $391,000 in interest. This is money that could have been saved by securing a better mortgage rate before his fixed rate expired. The lesson here is that even small rate increases can add up over time, so it’s essential to act quickly and proactively.
Section 3: How to Secure Better Mortgage Rates Before Your Fixed Rate Expires
The good news is that there are solutions available to help you secure better mortgage rates before your fixed rate expires. One such solution is Loan Location, a leading mortgage broker in Australia. Loan Location understands the complexities of the mortgage market and can help you navigate your options to find the best deal for your needs.
Our Approach:
Loan Location’s approach involves working closely with you to understand your financial situation, goals, and preferences. They then leverage their extensive network of lenders to find the best options available, including lower variable and fixed rates, cash backs of up to $5,000, and more.
The process of working with Loan Location is straightforward and hassle-free. After an initial consultation, they will determine your eligibility and requirements and walk you through the application process. They will also handle all the documentation and negotiation on your behalf, saving you time and money.
Conclusion:
In conclusion, low fixed mortgage rates can be a blessing or a curse, depending on how you approach them. It’s vital to understand fixed interest rates and revert rates and the risks of ignoring them. By taking action before your fixed rate expires, you could potentially save thousands of dollars in interest and enjoy greater financial freedom.
One of the best ways to secure a better mortgage rate is by working with a trusted mortgage broker such as Loan Location. They can help you navigate the mortgage market and find the best options for your needs. So if you want to avoid paying unnecessary extra interest, act now and contact Loan Location today. It could be one of the best financial decisions you make. Thank you for reading ‘Don’t Let Your Low Fixed Mortgage Expiration Sneak Up On You’ For more information get in touch with the button below!
