23rd March, 2023

Is Your Cheap Fixed Rate Mortgage Expiring?

Finance Tips
Home Loans
Property Investment
Refinancing
Tips
Written By Clinton Waters

The pandemic saw a torrent of ultra-low fixed interest rates set up for Australian homeowners and investors alike. However, many of these fixed loans are set to expire, and borrowers will face a sharp increase in their interest rates, which has been dubbed somewhat ominously by the Australian media as the “mortgage cliff.”

The expiry of these fixed rates over the coming months and years could cause significant financial stress for borrowers who are unprepared for the sudden increase in their mortgage payments. In some cases, monthly mortgage payments could double, putting a significant strain on an already elevated household budget.

Thankfully, there are some sound options available for those with fixed rates to mitigate the impact of the so-called cliff!

  1. One of the most effective solutions is to pick up the phone and call your current lender to needle them to improve your rate. It is a well-known fact in the banking industry that it is cheaper to keep a current borrower than to seek out a new one so you might be surprised by what they may be able to offer you. Once you have done this you can compare the market yourself or use the services of a mortgage broker to assist you in comparing like-for-like options.
  2. Failing a decent response from your current bank or lender, you can seek to refinance your home loan. This is best done by a professional mortgage broker, who will be experienced in comparing like-for-like products, policies and structures. Since interest rates started to rise in 2022 lenders have slowly increased the assessment criteria that may result in you being unable to refinance your current loan based on the revised stress-tested rates even though you are making repayments at a higher rate today! Further compounding this complexity is the fact that borrowers with higher LVR’s (Loan to Valuation Ratios) may have experienced a reduction in the value of their property which can make refinancing uneconomical. An experienced broker will help you clearly navigate the benefits and costs early on before you commit to any decision.
  3. Switch your loan to interest only and/or extend the term. This really should be a last resort option because while your monthly repayments may drop considerably, the true long-term cost can add tens of thousands of dollars to the total cost over the life of your mortgage. Extreme caution needs to be applied when looking at this option and getting a professional broker in your corner to model out the effects is highly advisable.

By working with an experienced mortgage broker, like the team at AXTON Finance, we can help you understand the terms of your current loan, including any hidden fees or penalties that could impact the refinancing process.  Will will have a high degree of confidence that your decision will be an informed one that one helps you avoid any costly mistakes.

The mortgage cliff is a looming challenge for borrowers with expiring ultra-cheap fixed home and investment loans. However, there are some simple solutions available, such as refinancing, that can help mitigate the impact of rising interest rates.

Get a free 30-second mortgage health check on your loan here today, call us on 03 9939 7576 for a quick chat or book a meeting online with a licensed Melbourne mortgage broker (obligation free of course) here

Read Next

1st November 2023

The Meaning Behind Axton Finance

A Strong Foundation for Your Mortgage Needs At Axton Finance, we take pride in being your preferred mortgage broking professional. With over two decades of experience and more than 250 Google f

Read more
Self-Employed-Homeloans-Best-Melbourne-Mortgage-Brokers-AXTON-Finance.jpg
5th May 2023

What self employed borrowers need to know

When it comes to applying for a low or alt doc home loan in Australia, it’s important to understand what lenders are looking for. While these types of loans can be a great option for thos

Read more
6th April 2023

Which professionals do you need when buying a property?

Purchasing a property is one of the biggest financial decisions you will ever make, and at AXTON Finance know the importance of having the right professionals by your side when embarking on you

Read more
6th March 2023

How To Get Approved When Refinancing Your Home Loan

With the rapid increase in interest rates in Australia and many people coming off ultra low interest rates there has been a cause for concern for many people looking to refinance their mortgage

Read more
16th February 2023

What Are The Benefits Of Having Multiple Offset Accounts?

When it comes to managing your home loan, one strategy that has gained popularity in recent years is the use of multiple offset accounts. While this approach may not be suitable for everyone, a

Read more
8th February 2023

Five Reasons To Refinance Your Home Loan

With interest rates set to continue to increase in early 2023 it has been in the news everywhere that you should be looking at ways to save money in your daily budget and one of the biggest sav

Read more
6th September 2022

How Does Bridging Finance Works?

Bridging finance is a term often thrown around in client meetings but not many people really understand how this policy works. So lets start at the top and work our way down. Imagine that you h

Read more
25th August 2022

10 Ways To Get Your Finance Approved First Time

Whether you’re refinancing or looking to purchase your first or third home, financing can be daunting. Even for the experienced, getting your finance approved can be a stressful process and w

Read more
12th August 2022

Finance Tips For Aussie Expats

So you are an Australian citizen or an Australian permanent resident (PR Visa holder) living and working overseas and looking at buying or refinancing a property back here in Australia? We look

Read more
14th February 2022

Rates On The Move

Read more
16th March 2021

Why You Need To Review Your Life Insurance

If you crash your car, in all likelihood you will have insurance, and be reimbursed for the damage. What if YOU experience a similar trauma? Are you insured and can you be certain that what you

Read more
5th November 2020

Moving house doesn’t have to be so heavy

We of course help clients everyday arrange competitive home loans for new homes and renovations and of course one of the outcomes is having to move all of your stuff from one place to the other

Read more
6th April 2020

COVID19 – Advice and guidance for finance hardship applications

Over the past 2 weeks we have fielded numerous enquiries from our clients with questions and concerns about how to approach lenders for hardship support relating to COVID19 and the impact this

Read more
23rd March 2020

COVID19 – AXTON Support Page

Firstly our small team at AXTON Finance hope that you, your friends and your family are looking after yourselves during this time. Please listen to government advice on how you can play your

Read more
30th October 2019

10 tips that can help your mortgage application

As you have probably heard in the media the nations lenders have clamped down on their lending criteria as a result of pressure from various government agencies like APRA and ASIC and from reco

Read more
17th November 2018

How to make a pre auction offer

With auction clearance rates slipping below 50% in some markets right now, vendors are much more open to a pre-auction offer. You’ll also find more vendors choosing a private sale over an auc

Read more
25th February 2018

That winning feeling for Steve & Cas

We are really pleased to share on our blog this great video documentary produced by Realestate.com.au in conjunction wtih CUA about the buying journey of two long term Axton Finance clients, St

Read more
16th February 2018

How Does Refinancing Your Home Loan Save You Money?

How Does Refinancing Your Home Loan Save You Money? When Australian academics researched the difference between renting for life and investing your hard-earned income into property ownership, t

Read more
17th October 2017

4 Easy Ways To Get a Better Interest Rate For Your Home Loan

Have you ever had that feeling of frustration that comes from buying an item at a store, then seeing it substantially cheaper at another shop? It can also happen with your home loan. And if you

Read more
11th October 2017

2017 Connective Excellence Awards Winner

Axton Finance is pleased to announce that we have been awarded Mercury Hero in the 2017 Connective Excellence Awards, in the face of some very stiff competition. This award recognises our inno

Read more
12th July 2017

Why is your interest rate increasing?

If the Reserve Bank of Australia (RBA) cash rate is so low, then why is your interest rate going up? We are asked this question a lot. The official cash rate, as set by the Reserve Bank of Aust

Read more
1st July 2017

Proudly sponsoring The Hawthorn Citizens Junior Football Club

Axton Finance is proud to announce their sponsorship of the Hawthorn Citizens Junior Football Club for the 2017 Season. The club was born out of the Hawthorn Citizens Youth Club, which commence

Read more
21st March 2017

Why should I speak to Axton?

Why should you be using a professional mortgage broker? This is probably a question you’ve asked yourself if you’re in the market for a home loan. The simple answer is, it is going to make

Read more
16th March 2017

What are mortgage comparison sites really comparing

It goes without saying that it pays to shop around.  With the rise of comparison websites for home loans, insurance, credit cards, real estate agents (the list goes on and on) there now seems

Read more
10th January 2017

Axton Finance wins at Connective’s Level Up Conference

We are very proud to announce that Axton Finance won Connective’s Brokerage of the Year <5 Staff VIC. Thank you to our great team and clients who supported us over the past 12 months.�

Read more
10th November 2016

Receiving a windfall

Guest blog content written by Corey Wastle – Licensed Financial Adviser @ Verse Wealth Most people will at some stage in life receive an unexpected amount of money. It might be a gift, wo

Read more
21st October 2016

Four smart questions to ask yourself when fixing your home or investment loan

1. Should I fix my home loan? With interest rates at historical lows currently (at time of publishing there is a 3.99%pa (3) Three year fixed home loan rate now available from a major lender!!)

Read more
20th March 2016

Reduce your mortgage insurance premium

There is no denying it – mortgage insurance or lenders mortgage insurance (LMI) kind of sucks. This short article is about ways in which you can avoid mortgage insurance or at very least

Read more
19th February 2016

Get your home sooner when a family member guarantees part of your home loan.

Do your parents want to help you buy a home or invest in property? Many lenders these days offer limited equity guarantee or family pledge loan structures to help you purchase a home without th

Read more
1st September 2015

Axton Finance client wins property investor of the year

Your Investment Property Magazine recently announced their Property Investor of the Year Winner who is actually Axton Finance’s long term client Matthew Armstrong! Matthew has built an im

Read more
3rd August 2015

10 tips to paying off your mortgage sooner

I often joke with clients that I provide them with something they don’t really want – a mortgage. Lets face it – a mortgage in its own right isn’t too exciting but it enables your d

Read more
6th May 2015

Are you an Australian Expat?

Over the years I have helped countless Australian expat clients working in all corners of the world to appropriately finance their property portfolio back here in Australia. Building your prope

Read more