When it comes to mortgages, it’s essential to keep an eye on the expiry date of your fixed interest rate. If you do not take any action, your interest rate may revert to the standard variable rate, which could result in a significant increase in your monthly mortgage payments.
What does that mean for you?
Many homeowners are unaware of this potential increase and the impact it can have on their finances. For example, if you have a $500,000 mortgage with a 1.99% fixed interest rate over 25 years, your current monthly repayments are $2111. However, if your fixed rate expires, your lender may automatically switch you to a variable loan with an interest rate of up to 7.19%. This could increase your monthly payments by $1484, resulting in over $17,000 in additional payments per year.
What do we do about this?
Fortunately, there is a solution to avoid paying more interest than necessary. Refinancing your mortgage can help you find a suitable lender with a low variable or fixed interest rate, and potentially save you money in the long run. Additionally, many banks are currently offering cashback incentives of up to $5000 to cover the cost of refinancing. This means that you could not only avoid an increase in monthly payments but also receive cashback that you can use towards other expenses or savings.
