Rolling off your Fixed Home Loan? Here’s how to prepare

All good things must come to an end, and that includes ultra-low fixed rates. Here are a few ways that may help you manage the jump to higher repayments.  

If you’ve been enjoying the benefits of a lower-than-average fixed-term interest rate, you’re probably not looking forward to the day it expires.

Given the Reserve Bank of Australia (RBA) has lifted its cash rate several times in the past 12 months, most homeowners who locked in a fixed rate either earlier this year or last year will find themselves paying much more when their term ends.

While higher repayments are never good news, the right preparation can prevent a budget blowout. Here are a few tips.

1. Know when it’s happening and how much more you’ll pay

Make sure you know what your new rate and repayments are likely to be if you do nothing and your loan rolls into a variable rate loan. Then consider setting calendar reminders in the weeks before your rate is set to change, to give yourself an opportunity to think about your next move. Not only will you be able to revisit your budget, but also it will give you the chance to have a chat to your family and to us about how things have been going and any changes that need to be made.

2. Start looking for savings now

In the lead up to your fixed term’s expiry, think about whether there are any opportunities to put extra cash aside in a high-interest savings account. It’s a tough ask at the moment, given the cost of living has increased and many of us have found ourselves with little extra to spare.

One strategy involves calculating the difference between your current fixed rate and a variable rate loan, then testing how it would challenge the budget by trying to find that extra cash over a period of a few weeks.

Popular ways of trimming costs include cutting down on subscriptions and memberships, shopping around for grocery deals, switching to public transport or car-pooling for a period, and selling unwanted items online.

3. Consider another fixed term or a split

While you probably won’t be able to get the same low rate you locked in earlier, you may want to consider another fixed-term home loan. If you’ve enjoyed the certainty of regular repayments and not having to worry about the RBA’s next meeting, it could be worth considering. Police Bank still has some of the lowest rates on the market.

You also have the option to split your loan between a fixed and variable rate, which can give you the security of a fixed-term loan, along with the flexibility and features of a variable loan.

4. Speak to one of our lending specialists

At Police Bank, we don’t like the idea of our members being surprised by a rate change, which is why we make ourselves available to chat to you before your fixed term ends. Our lending specialists can run you through our catalogue of loans and talk to you about whether you’re eligible for any of our special police rates.

Every borrower’s situation is different, which is why it’s often worth talking to us about your circumstances over the phone or face-to-face. We can’t provide personal advice, but we can run you through your options and the features of our various types of loans.

Police Bank Ltd ABN  95 087 650 799 Australian credit license and AFSL 240018. This article is general advice only and does not take into account your objectives, financial situation and needs. Before acting on the information, you should consider whether it is right for you. Before making any decision to acquire any product or service you should obtain and consider the relevant TMDs and Terms & Conditions available on our website at: https://www.policebank.com.au/target-market-determinations or by calling 13 17 28