When your variable interest rate continues to fluctuate, switching to a fixed interest rate through refinancing can provide the payment stability you need. For Mentone homeowners, this financial strategy offers predictable monthly repayments and protection against future rate increases.
Understanding Variable vs Fixed Interest Rates
Variable interest rates change according to market conditions and Reserve Bank decisions. While this means your repayments can decrease when rates fall, they also increase when rates rise. A fixed interest rate locks in your rate for a predetermined period, typically between one to five years.
During the fixed rate period ending, you'll need to decide whether to:
- Switch to another fixed rate
- Move to a variable interest rate
- Refinance with a different lender
Why Consider Refinancing from Variable to Fixed
Refinancing to switch from variable to fixed rates offers several advantages for your financial situation:
Payment Certainty: Fixed repayments help with budgeting and financial planning, particularly important for families managing household expenses in Mentone.
Protection Against Rate Rises: When you expect interest rates to increase, locking in current rates can save thousands over the loan term.
Accessing Lower Interest Rates: Finance & Mortgage Brokers can access loan options from banks and lenders across Australia, potentially securing more favourable refinance interest rates than your current variable rate.
Additional Benefits of Refinancing
Beyond switching rate types, refinancing can help you:
- Release Equity: Releasing equity in your property provides funds for renovations, investments, or to release equity to buy the next property
- Consolidate Debts: Combine multiple debts into your mortgage at a lower interest rate
- Reduce Loan Repayments: Extend your loan term to lower monthly payments
- Change Loan Features: Access redraw facilities, offset accounts, or other beneficial features
The Refinancing Application Process
Working with experienced Finance & Mortgage Brokers streamlines your refinancing journey. The application process typically involves:
Documentation Gathering: Prepare recent bank statements, payslips, and property valuations. Your broker will advise on specific requirements based on your loan amount and chosen lender.
Lender Comparison: Professional brokers can check eligibility for special lender policies and compare better loan options across multiple institutions, ensuring you access the most suitable fixed rate product.
Application Submission: Your broker manages the streamlined application process, liaising with lenders on your behalf and keeping you informed of progress.
Settlement: Once approved, your new lender pays out your existing loan, and you begin making repayments at your new fixed interest rate.
Timing Your Switch
Several factors influence the optimal timing for refinancing from variable to fixed:
- Current market interest rate trends
- Your existing loan's terms and any exit fees
- The difference between current variable and available fixed rates
- Your personal financial circumstances and goals
- Length of time you plan to stay in your current property
Considerations Before Refinancing
While refinancing offers many benefits, consider these factors:
Exit Costs: Your current lender may charge break fees or exit costs, particularly if you're within an existing fixed rate period.
Application Costs: New loans involve application fees, valuation costs, and legal expenses. Factor these into your calculations.
Loan Features: Ensure your new fixed rate loan includes features important to you, such as extra repayment options or offset account access.
Fixed Rate Period: Choose a fixed rate period that aligns with your financial goals and market expectations.
Working with Ozgroup Finance
As established Finance & Mortgage Brokers serving the Mentone community, Ozgroup Finance provides access to loan options from banks and lenders across Australia. Our local knowledge combined with extensive lender relationships means we can identify opportunities that align with your specific financial situation.
Our team understands the local property market and can provide tailored advice on whether switching from variable to fixed rates suits your circumstances. We handle the complex paperwork and lender negotiations, allowing you to focus on your daily life while we manage your refinancing requirements.
Whether you're looking to access a lower interest rate, change your loan term, or release equity for future investments, our experienced brokers can guide you through available options and help structure a loan that meets your needs.
Refinancing from variable to fixed interest rates can provide financial stability and potentially significant savings. With professional guidance, you can make informed decisions that support your long-term financial objectives.
Call one of our team or book an appointment at a time that works for you to discuss how refinancing to a fixed interest rate could benefit your financial situation.