Could now be the time to fix your rate?
With an increasing number of both new and existing mortgage holders choosing to lock in a fixed rate loan, it may be time to explore this option if you have not already done so.
We are seeing more clients explore the fixed rate option, and for good reasons. Though not always appropriate for all mortgage holders, now more than ever it is worthwhile to have a conversation with your mortgage broker to see if fixing may be beneficial.
Here are the main reasons clients are looking to fix.
Historically low rates
Low rates are still peppering the market and not taking advantage of these could be doing yourself and your finances a disservice. Some lenders have fixed rates under 2% with many sitting just above the 2% threshold. A reduction in your rate could translate in considerable savings so investigating the potential savings from a fixed rate loan is highly advisable.
Fixed doesn’t always mean inflexible
There was once a time when locking in a fixed rate product meant forgoing all the features enjoyed by a variable loan. Fortunately, there are now lenders who offer more flexibility with their fixed loans such as the provision to pay more into the loan as well as offsetting capabilities available that once weren’t.
Split it to hedge your bets
There still are some mortgage holders who are not completely sold on the idea of locking in a rate, and that’s ok. There is no reason why you cannot maintain the ultimate flexibility of a variable loan as well as an additional fixed product by splitting your loan. Your mortgage broker can offer some guidance as to structuring your splits to align with your unique circumstance.
It doesn’t necessarily mean refinancing
This is key. Securing a low fixed rate doesn’t necessarily mean embarking on a full refinance application if the fixed rate loan you seek is with your existing lender. Most banks offer simple switching options involving a form that your broker can prepare and forward to confirm your request. Alternatively, there are several who allow you to complete the fix request via your internet banking. Just check with your broker what options are available with your lender.
Lender rebates are still available
If there is a great fixed rate product that you would like to pursue with another lender, of course we can guide you through that process also. The bonus is that many banks still have incentives in the way of rebates available as an added draw card to win your business. The amount of these rebates varies from lender to lender, but you can expect to pick up around $2,000 or more depending on where you land.
We encourage our clients to check in with us at least annually to ensure they are maximizing the potential savings available in the mortgage market. If you think that locking in a low rate may serve you well then, we recommend having a conversation with your broker to see how we can help you save on your home loan.