Does three rises mean it’s time to fix?

With three consecutive months of cash rate rises (and predictions for more later this year) many home owners are considering fixing their home loan. Banks have been competitive with their fixed mortgage rates recently (thanks to reduced long term borrowing costs in the United States) making fixed rates even more attractive to anyone looking for the cheapest deal.

Of course it’s not that simple as there are several factors to consider – what’s best for you doesn’t always mean the lowest rate. Firstly, you need to be clear on your personal and financial goals. Having a clear idea of how much flexibility you need is very important. Firstly consider your living and investment situation – do you think you might want to sell and/or purchase a new home or investment property in the near future? You also need to take into account any travel plans (or dreams) and your retirement or career plans.

If you don’t expect your living and financial situation to change much for the next few years and are attracted to the security of consistent loan repayments then a fixed loan could work well for you. There are also options for fixed loan terms – a shorter three years term may work better for you in the long run than a five year product.

Need flexibility in your life? Then a floating rate will be more up your alley. This is a more suitable option if you want to make extra repayments along the way to reduce your loan term.

You can also have a bit of both by splitting your loan – fixing a portion of your loan and having the remaining loan on a floating rate. This can give you some security but also allows more flexibility to make some extra repayments along the way.

Unsure of what is the best move (if any) for you? That’s ok. There’s an easy way to find out the right option for your needs and goals. Contact me. I can review your situation and talk you through your options and the implications of each.