How to Refinance from Variable to Fixed Rate

Why Switch from Variable to Fixed Rate?

If you're currently on a variable interest rate and watching the market closely, you might be wondering whether it's time to lock in a fixed rate. Many homeowners on the Central Coast are asking themselves this question right now.

A variable interest rate moves up and down with the market, which means your repayments can change. This can make budgeting challenging, especially when rates are moving around. On the other hand, a fixed interest rate stays the same for a set period - usually between one and five years. This gives you certainty about your repayments and can help you manage your household budget with more confidence.

When you refinance to switch from variable to fixed, you're essentially moving your home loan to a new loan product with a locked-in rate. This could be with your current lender or a different one entirely.

When Does It Make Sense to Refinance?

There are several situations where refinancing from variable to fixed rate makes sense:

• You want predictable repayments for budgeting purposes
• You believe interest rates might continue to rise
• You're planning major expenses and need to know exactly what your mortgage repayments will be
• You've found a fixed rate that could save money refinancing compared to staying on your current variable rate
• Your financial situation has changed and you need payment certainty

A home loan health check can help you understand whether refinancing is right for your situation. Looking at your current loan amount, interest rate, and comparing it with what's available in the market gives you a clear picture.

Understanding the Refinance Process

The refinance process isn't complicated, but it does require some preparation. Here's what typically happens:

1. Loan Review: We'll look at your current home loan, including your loan amount, remaining term, and current interest rate
2. Property Valuation: Your property will need to be valued to determine how much equity you have
3. Compare Refinance Rates: We'll look at current refinance rates from different lenders to find options that suit your needs
4. Refinance Application: Once you've chosen a product, we'll help you complete the refinance application
5. Settlement: The new lender pays out your old loan and your new fixed rate begins

The refinance application process usually takes a few weeks from start to finish, though this can vary depending on your circumstances and the lender.

What to Consider Before You Lock in a Rate

Before you refinance to switch to fixed, there are a few important things to think about:

Break Costs: If you're currently on a fixed rate period ending soon, you might face break costs for leaving early. However, if you're already on a variable rate, this won't apply.

Loan Features: Fixed rate loans often have different features compared to variable loans. You might have limits on extra repayments, or you might not have access to features like a refinance offset account or refinance redraw facility. Make sure you understand what features you'll be giving up or gaining.

Fixed Rate Period: Think carefully about how long you want to fix for. A shorter fixed rate period gives you flexibility sooner, while a longer period gives you rate certainty for more years.

Your Financial Goals: Are you planning to access equity for investment purposes? Want to consolidate into mortgage? These goals might influence which loan product works for you.

The Cost of Staying Put

Many Central Coast homeowners don't realise they could be paying too much interest by staying with their current loan. If you're stuck on a high rate, you could potentially save thousands over the life of your loan by refinancing.

When you move mortgage to a new lender or product, you might also gain access to improved features that reduce loan costs or improve cashflow. This could include things like lower fees, the ability to make extra repayments (on some fixed products), or more flexible terms.

Fixed vs Variable: What's Right for You?

There's no one-size-fits-all answer to whether you should switch to fixed or stay variable. It depends on your circumstances, risk tolerance, and financial goals.

Some homeowners prefer to split their loan - keeping part on a variable interest rate and fixing part. This gives you some rate certainty while maintaining flexibility with the variable portion.

Others might be coming off fixed rate and deciding whether to fix again or switch to variable. If your fixed rate expiry is approaching, now is the time to review your options rather than automatically rolling onto whatever rate your current lender offers.

Local Knowledge Matters

Here on the Central Coast, property values and market conditions are unique. Whether you're in Narara or elsewhere in the region, working with a mortgage broker in Narara, NSW who understands the local market can make a real difference.

We understand the Central Coast property market and can help you with everything from a home loan health check to accessing a lower interest rate through refinancing.

Getting Started with Your Refinance

If you're thinking about refinancing your home loan to lock in a rate, the first step is to understand your current position. What are you paying now? What equity do you have? What are your goals?

From there, we can look at current refinance rates and work out what switching from variable to fixed would mean for your repayments and your long-term financial position. We'll handle the paperwork, liaise with lenders, and guide you through each step.

Whether you want to save on interest rate, improve your loan features, or simply get more certainty around your repayments, we're here to help you work out if refinancing is the right move.

Call one of our team or book an appointment at a time that works for you. We're local to the Central Coast and ready to help you review your home loan options.