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    When the time comes to refix your mortgage, especially in a time of high interest rates, information is key. Homeowners need to understand what they can do with their loans: how they can keep them affordable and for how long they should fix them. Sadly though, many people rush through the refixing process without considering the consequences, or they lack a framework to help them assess their options effectively.

    To help you make sound, informed decisions about your mortgage when it comes up for mortgage refixing, we suggest, this framework may give you additional information that can be helpful to you which comes from Aseem Agarwal, Head of Mortgages at Global Finance, containing the following five key points.

    1. Outlook: Assessing the interest rate landscape

    Firstly, when your mortgage is up for renewal, you need to evaluate the outlook on interest rates. Aseem advises, “Depending on the cycle, you’ll either find that interest rates are predicted to stay stable, go down, or rise. Understanding the current trend is crucial in determining the most suitable refixing strategy.”

    • If interest rates are expected to rise or remain stable, it makes sense to lock in a longer-term fixed rate to avoid potential rate increases in the future.
    • In times of predicted rate decreases, opting for a shorter-term refixing period (such as six months to one year) allows you to take advantage of lower rates when they become available.

    2. Offer: Exploring your options

    Many banks tend to provide customers with a standard interest rate when their loan comes up for renewal without clarifying if it’s their best offer. Aseem emphasises the importance of exploring options. “Don’t assume that the bank is providing you with the best rate. Take the initiative to ask around and seek advice from mortgage advisors and other banks to compare offers.”

    • Inquire about the offers being extended to different customers by the same bank, as well as the rates offered by other banks. Are you eligible for a better offer and lower rate of interest?
    • Consult with mortgage advisors. We have comprehensive knowledge of the market and can provide insights into the best rates available.
    • Let an accredited mortgage advisors negotiate on your behalf to secure the best possible offer based on your eligibility and financial situation.

    By actively comparing rates from different banks and channels, you can determine whether you’re getting the most competitive offer.

    3. Affordability: Ensuring manageable repayments

    Part of evaluating your refixing options is looking at your financial capacity. Aseem advises, “Understand the impact of different interest rates and repayment amounts on your current and future financial situation.”

    Whether it’s fixed for a one-year, six-month, or two-year loan or longer, it’s crucial to consider how you’ll manage your repayments. The last thing you want to do is choose a home loan repayment that becomes unaffordable, and you have to then ask the bank for financial hardship assistance or to put your home loan on interest only.

    • Assess your income, expenses, and any anticipated changes over the next 12 months.
    • Work with financial advisors who can help determine what repayment amounts are feasible within your budget.
    • Avoid the risk of defaulting on repayments by choosing an option that aligns with your repaying capacity.

    4. Timing: Seizing opportunities

    Timing plays a crucial role in locking in the best interest rate. Many people are unaware that they can lock in a new interest rate before their current home loan expires. Banks usually let customers secure an interest rate for their loan renewal 30 to 60 days in advance. Aseem recommends taking advantage of this option, if appropriate specially when interest rates are increasing.

    • If interest rates are anticipated to rise, consider locking in your loan as early as possible, typically within 30 to 60 days before the expiry date as allowed by your lender.
    • Conversely, when rates are expected to drop, it may be advantageous to delay locking in the rate until closer to the expiry date. This allows you to potentially secure a lower rate than is being offered ahead of time.

    5. Advice: Tapping into expertise

    Aseem emphasises the benefit of seeking professional advice during the refixing process. “If you want to talk to someone who works in the market and can give a comparison of what every bank is giving on any given day, just ask a mortgage advisor.” He states, “Engaging with a mortgage advisor is invaluable,” and is concerned that many people may not appreciate that their team doesn’t charge for providing financial advice on the rollover of home loans.

    • Get in touch with a mortgage advisor who can assess your financial situation and provide guidance on the options available to you.
    • Benefit from their expertise in comparing offers from your current bank as well as other banks.
    • Take advantage of their understanding of the financial markets and interest rate movements.
    • Use their financial expertise so that whatever repayments or interest rates you choose, they’re going to be affordable.

    Have suitable loan structure which may save your interest sometimes a significant amount and time that too without increasing your loan instalment. This type of savings is difficult to achieve by negotiating few basis points lower interest rates which borrowers do. Global Finance can help you through Mortgage Genius Plan®

    Contact Global Finance for support and free advice

    Refixing your home loan may look simple but it is not if you have aim to save or reduce interest cost.

    we understand that just pressing a button on your online banking site and simply rolling over your loan without thinking about the consequences or seeking advice may look attractive. But don’t do it!

    It works in the interest of lender but sometimes against the interest of borrower.

    At Global Finance, we can answer your questions, provide support and up-to-the-minute advice, and we can negotiate on your behalf. “We believe in empowering borrowers to make good, logical decisions. Our team is here to assist you every step of the way.” What’s more, “our brokers do this for free; they don’t charge their customers for providing financial advice on their rollover of the loans.” Contact us today to book a no-obligation chat on 09 2555500 or info@globalfinance.co.nz

    The information and articles published are true to the best of the Global Finance Services Ltd knowledge. Since the information provided in this blog is of general nature and is not intended to be personalized financial advice. We encourage you to seek Financial advice which is personalized depending on your needs, goals, and circumstances before making any financial decision. No person or persons who rely directly or indirectly upon information contained in this article may hold Global Financial Services Ltd or its employees liable.