Sage Advice
Should I Break and Refix?
by Anthony Sage
Earlier this month, I had the opportunity to join the Breakfast Show on 1News to discuss the merit of breaking and re-fixing your lending early, the property market as a whole and to field live questions from viewers.
As interest rates have been historically low for the past decade, many borrowers now find themselves with low fixed rates coming up for renewal in the next 12 months, resulting in a big jump in repayments when repricing to current market rates.
There can be merit in breaking and re-fixing now, to ensure your next 3-5 years have a manageable plan in place. This serves as an insurance policy if rates continue to rise, and we are not often seeing break fees in these situations, which takes one strong consideration out of the equation.
Interest rates appear to continue to rise, so hedging your bets by taking a medium to long term rate now may not be a bad idea. Splitting up your lending is always prudent to ensure less exposure to market changes and the ability to review a portion of your lending every year or so. Revolving credit or offset facilities can reduce interest paid and provide further insurance if cashflow becomes a bit tight in the future.
Of course, every situation is unique, so please sit down with your favourite adviser and review all options on the table, to ensure whatever you pick fits your medium to long term goals and requirements.
Check out the full interview below:
