5 ways to prepare before your fixed rate home loan expires

If you’ve been living with a fixed rate home loan, chances are you’ve been watching interest rates rise, thinking you’ll take care of that later. But the time to start planning is now.

Here are five steps that can help you make the most of your low fixed rate today and get your finances in great shape for tomorrow.

1. Smash your home loan balance. 

Here’s a simple tip. The lower your home loan balance, the less you can feel the  impact of rising interest rates. So it makes sense to pay as much as possible off your loan while you’re still on a red hot fixed rate. If your fixed rate home loan is with Virgin Money, you can pay off $10,000 each year without any early repayment fees.

If you’re not likely to reach that amount, no problem. Trimming even small amounts off your loan balance while on a low fixed rate can still put you in a strong position to navigate higher rates when your fixed rate term ends. And in the meantime, it can lower your interest cost and shave years off your home loan.

Head to our Mortgage Repayments calculator to see the impact of paying more on your home loan – while staying within your fixed rate repayment limits.

2. Blitz your budget. 

If you’re scratching for cash to make extra repayments, it’s time to head back to your budget.

Take a closer look at spending to know where your money is really going. Putting spending under the spotlight can also help you figure out where you can cut back expenses without cutting back your lifestyle.

Take stock of your spending and then try to introduce some new positive money habits that will help you save. If you’re new to budgeting, the Virgin Money app makes it easy to set a budget, create savings goals, and track your spending. Trimming back your spending now doesn’t just free up cash for extra loan repayments, it helps you get financially fit for when your fixed rate ends.

3. Cue fortnightly payments. 

Getting ahead while you’re still on a fixed rate can be as simple as switching from making monthly to fortnightly loan repayments. There are 12 months in a year, but by a quirk there are 26 fortnights. When you pay half your monthly repayments every fortnight, you make the equivalent of 13 months’ worth of repayments.

It’s a simple hack that lets you pay more off your loan without too much of a squeeze on personal cash flow.

4. Show your savings some love. 

What’s not to love about savings? It’s money that lets you be the boss of  unexpected bills, and it shows you’re in control of spending.

Having a pool of savings can also help you manage your home loan repayments when your fixed rate term expires.

5. Get into the groove of higher repayments. 

While you can’t control how many more rate rises there’ll be before you come off your fixed rate, you can help lessen the impact it makes when it does eventually happen. Once you’ve blitzed your budget (thanks, point 2), use our Mortgage repayments calculator to gauge what your repayments might be with rate rises factored in.

Once you have a ballpark figure, see if you can start putting this amount away month to month. By getting into the habit of this early, it might help the sting once your rate does eventually go up.

We’ll help you sort through the options. 

The end of a fixed rate home loan can feel like D-Day is approaching. But it’s not a cue to hit the panic button, and if you prepare yourself now, you’ll be well-equipped to manage the changes when the time comes.

To find out more about how Virgin Money can help you with your home loan, get in touch with us on 13 81 51.

Find out more about our home loans