To Fix, Float or Split? That is the Question
If you are among the 60% of borrowers that have fixed rates expiring on their mortgages within the next few months you might want to look very closely at how you are going to restructure things for the coming years.
The most common question we get asked at the moment is: how long should I refix for?
The answers always differ for each individual, but the formula of how to get there remains the same.
👉 What is your affordability looking like?
👉 What are your financial goals for the next 1-5 years?
👉 Are you looking to move or sell your property?
👉 Are you expecting a pay rise?
👉 Are you expecting a new addition to the family?
👉Are you taking on more financial responsibility by helping aging parents?
You can start to see the picture here. These types of questions will form the basis of a financial plan and the plan will form the basis of how we look to structure your mortgage.
Spreading your risk by splitting your mortgage. 🏡
Rather than fixing your entire mortgage for the same period, a lot of clients choose to split it out across multiple fixed rate periods - for example one, two and three years. This creates more opportunities to relook at your budget and reassess your repayment structure. You could also consider putting some of it on a floating interest rate. By splitting your loan, you'll soften the blow of market changes and ensure your entire mortgage isn't maturing at the same time. That way your repayments shouldn't suddenly increase by such a large amount, and you'll effectively be getting the best of both worlds. Another advantage of splitting your mortgage is that it allows you a great deal of flexibility in how you manage your loan: the fixed interest rate portion gives you the security of stable interest rates and repayment levels, while the floating interest rate portion allows you to take advantage of loan features such as additional repayments and redraw facilities.
If you have a mortgage coming off its fixed term shortly, make sure to get in touch with us so we can put a plan in place and help you to weather the storm.