In recent years, many lucky Australians locked their loan into a fixed rate at or below 2 per cent. While that same group of honmeowners were shielded from the almost monthly rising rates, they were instead faced with an immediate mortgage hike once their fixed term ended. 

It's hard to say which scenario is better than the other, and we don't always know what lies ahead – but we can prepare ourselves for the future. If you're currently on a fixed rate that is set to expire soon, here's our steps to help you make the most of your fixed rate today and get your finances in good shape for tomorrow.

1. Get your home loan balance to a healthy position

The lower your home loan balance, the less you'll feel the change in repayments. So it makes sense to pay as much as possible off your loan while you’re still on a fixed rate.

Now, not all fixed rates allow you to pay extra, or they have a limit. 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 changing 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. Get your budget into shape

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 on 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. Switch your home loan to 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. Try our repayment calculator to understand how you can make this change to get ahead.

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 will be handy at any age or stage, but it can also help you manage your new home loan repayments when your fixed rate term expires and your regular outgoings change. Especially if you move into a variable rate, some extra moolah in the piggy bank will help potentially fluctuating payments.

5. Get into the groove of changing repayments

Once you’ve blitzed your budget (thanks, point 2), work out what your repayments might move to with rate changes once your fixed term ends. Our Mortgage repayments calculator is a great tool to see what you could be paying if rates continue to fluctuate and change.

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.

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