Are you one of the lucky ones in a very low fixed rate?

For home loan customers who fixed for 2 or 3 years pre and during Covid, many were lucky enough to lock in fixed rates around 2.29%, with some as low as 1.89%.

Yes.....1.89%! It's almost too mind boggling to comprehend that this is where rates were during Covid., especially when the most competitive rates at the moment are more likely to be sitting around 5.89% (with many mid to high 6%).

Given you have escaped the 11 months of rate rises that variable rate customers have endured, you may feel somewhat unaffected by all the interest rate chatter. After all your repayments are still so much lower than they could be.

While it can be comforting to be one of the lucky ones in those historically low rates which have long since disappeared from the market, there are things you can do right now to squeeze ever ounce of benefit out of your low, fixed home loan rate.

Firstly, consider paying more than is required with regards to your minimum repayment. If your interest rate is quite manageable at 1%-2%, while your rate is so low, build up a buffer in your loan by making extra repayments. Whether it is via extra repayments or a lump sum, this could make all the difference in giving you more leeway and breathing room than you would have other wise when you do come out of your fixed rate. (Side note, many fixed loans have a maximum $10k per fixed year that a customer can make in extra repayments so find out what you can and can't do).

The buffer that you build up could be used to help in meeting your future, significantly higher variable repayments which you will need to pay sooner or later. Or it could be used to pay down your loan balance, to actually reduce your future repayments. Even a fraction off a higher rate can help.

Either way, thinking about this towards the end of your fixed rate might mean you have left it too late to benefit as much as you can from your low, fixed rate. Anything you can do now to make your life a bit more manageable when your home loan rate and repayments are a lot higher than they are now,, will make a difference.

Please, act before it's not too late on your loan. If you are in the fortunate position where you could do a little bit each month now, ask your broker to check your ins and outs of making extra repayments and once armed with this knowledge, make some decisions before your fixed rate expiry looms its ugly head.