Fixed interest rate loan review

Rising interest rates, increased living costs, school fees, committed holidays or home improvements - can be cause for concern in the current market.

Many clients may have fixed their home loans or investment property loans at incredibly low rates in the last few years. These loans will be maturing into a rising interest rate market.

Usually a fixed rate will be lower than the current variable rate offered by the banks. Currently, fixed rates are higher than variable rates, with a market view that variable rates are approaching the highs of this interest rate cycle.

Some options to consider when your fixed rate loan matures:

• Is there surplus capital to facilitate a debt reduction?

• Is the conversion from a principal and interest repayment to an interest only repayment appropriate to assist in managing loan repayment amounts until the variable rate cycle begins reverting?

• Is an extension of the term on the principal and interest loan appropriate to assist with the current cash flow?

• During the fixed rate loan period, you could not use a linked offset account. However, as a variable rate loan, you can link an offset account to reduce the variable rate cost.

Please contact your advisor to review your personal loan structure and see how we can help.