When your fixed home loan term expires, your loan will typically revert to the lender’s ‘standard variable rate’, which is often much higher than the fixed rate. This means that your monthly repayments will likely increase, as your interest rate will be higher.

At the end of your fixed term, you have a few options, which may include:

  • Refinancing – you could look for a better deal with another lender and refinance your home loan. This would involve applying for a new loan and paying off your existing loan with the new one. Refinancing may involve costs such as discharge and application fees, but the saving in interest is likely to well-outweigh the costs in changing lenders.
  • Negotiating a new rate with your current lender – you could contact your lender to negotiate a new interest rate that is more competitive than their standard variable rate. However, this is not always possible and your lender may not be willing to offer you a better deal than you could get elsewhere.
  • Switching to a different type of loan – you could switch from a fixed rate to a variable rate or split your loan between fixed and variable rates. This can provide you with more flexibility and potentially save you money on interest.

It’s important to review your options and consider your individual circumstances before making a decision. You may wish to seek advice from a financial advisor or mortgage broker to help you make an informed decision.

What is a ‘standard variable rate’?

A standard variable rate (SVR) is an interest rate that a bank charges on their home loans. The SVR can change at any time, and the lender has the discretion to increase or decrease the rate. The changes in the rate often depend on the Reserve Bank of Australia’s cash rate, market conditions, and the lender’s costs of funding. 

It is usually the default rate that borrowers move to when a fixed-rate, discounted or introductory period comes to an end. The good thing? Mortgage brokers have access to many lender’s loan products and can negotiate discounts to standard variable rates that last the life of the loan!

It’s important for borrowers to regularly review their home loan interest rate and shop around to ensure they are getting the best deal for their individual circumstances.

Cashback $$$

We might be beating a dead horse at this stage, but a handful of lenders are still offering up to $5,000 cash to customers to refinance with them.

Let’s get you a better rate with some added cash in your back pocket!

 

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