When you first buy a house there is a lot happening, over time complacency can sneak in when it comes to getting a competitive interest rate.
Even small savings made on the loan interest rate can save you a lot of money over the years of the loan. The mistake we see most frequently is for people to focus on the importance of the interest rate only at the beginning of a home loan, but not give it much thought as time goes on. When it comes time to refixing your mortgage with us, this is an opportunity to revisit your rates and terms afresh.
When a fixed-rate mortgage is approaching the end of its fixed term, the bank will normally send out a basic tick-the-box form for you to choose from, to roll the mortgage over. On the face of it, this would seem to be a fast and convenient service. However, we feel this is more focused on making life easier for the banks’ administration. It does not necessarily lead to the best financial outcome for you. When it comes to finances, the easy route is not always the best route! Be pro-active and take a moment to contact us and request a call-back from a mortgage broker to review your before refixing.
A mortgage adviser is able to make sure that not only do you get the home loan at the start of the process, but also that the ongoing rates and structure of the loan are the best for you they can be. There is a small amount of paperwork involved with refixing but your chosen broker will handle most of that for your convenience.
Re-fixing with the assistance of a broker doesn’t necessarily mean you have to change banks. Typically, if you’re generally happy with the service and rates your bank provides then your mortgage adviser will discuss the merits of staying loyal to them. Your chosen broker can help with getting the best out of the refixing process with your current bank, or facilitate a switch of loan providers if terms are more favourable with a competitor bank.
"How do I get the very best rate from my bank?"
There are 2 main ways to do this:
- If you are DIY inclined talk to your banker to negotiate your rates and terms.
- Get an Approved Mortgages advisor to do this for you - utilise our experience and market knowledge to your advantage. This is something that we do particularly well for our clients.
Banks make their profits from the difference in the rates they give to their ‘savers’ and their ‘borrowers’. With this in mind, it's not in the banks best interest to give you the very cheapest rates. Just like any other product being sold to you, they want to keep as much profit as they can. Let us work on your behalf to negotiate discounted rates and favourable terms.
"Do I really need to leave my current bank to get a better deal?"
No, not necessarily. Sometimes the hassle involved in changing bank accounts doesn't justify the savings. Where ever possible it's smart to try get the best deal with the bank you are currently with. Banks naturally don’t want to lose clients and so they will quite often try to retain you. We’d much rather see you remain with your current lender than have you swap and we’ll do our best to keep this relationship working for you.
We’re here to take the hassle off your hands and we don’t charge to have a chat about your re-fixing your home loan.
"I'm not happy and I now want to switch my bank lending"
The most common reasons we see people choosing to switch their home loan provider are:
1) They are disappointed in the service they have had from their bank
2) They are simply after a better deal than what their bank has offered them
3) Their current bank wont lend them the funds they need for their plans
No matter what your reason is for wanting to switch banks, you need to still need to know that you will get the best possible deal. If you have decided to switch and we are acting for you, we signal to your existing bank that they have just one last chance to put their very best offer forward as you are shopping around now we wont go back to them later on.
You can learn more here about refinancing (switching banks).
"Should I fix my interest rate or go on the floating rate?"
This question is purely dependent on your individual situation and plans moving forward. Broadly speaking, fixed interest rates are great for your peace of mind knowing the amount to be paid monthly is a fixed amount. They do however have less flexibility around extra repayments than ‘floating rate’ loans. Also when interest rates fall, as they did through 2008-2016 on a fixed rate you miss out on these lower rates until your fixed rate period expires. The opposite is true though for when interest rates increase.
It is a fool’s game to try and pick the perfect fixed rate vs floating rate at any given time. A lot of our clients instead opt to sit on the fence and split a portion of their loan on a fixed rate and leave another portion on a floating rate revolving credit mortgage. It makes sense to talk this through with an expert. Your Approved Mortgages advisor will explain differences in detail and give you some reassurance around adopting a smart strategy moving forward.
We’re here to take the hassle off your hands and we don’t charge to have a chat about your refixing your home loan.
Getting the best rate is important but there are other factors that can be even more important depending on your future plans.
Just like most service providers, some banks do provide better service. Does your local bank provide everything you require? Some banks also don’t penalise borrowers who wish to make extra repayments and provide more flexibility.
This is talking about how the loan is set up. Factors like the fixed interest time-frames, loan splits and interest only periods all have impacts depending on our unique plans.
Are you planning on selling the house in the near future?
Is your income earning capacity going to change with a baby on the way?
Are you expecting a bonus or pay-rise?
Talk to us when it comes time to refixing your home loan. We’re here to give you smart recommendations on the best rate and structure for your plans.