Dear Vanessa,
I’m feeling completely stuck when it comes to my mortgage. My fixed rate is ending soon, and I have no idea whether I should lock in another fixed rate or go variable.
I keep hearing different opinions – some say rates will go up again, others say they’ll drop. I don’t want to make the wrong decision and end up paying more than I need to.
For context, I have 15 years left on a 30-year mortgage and a reasonable amount in an offset account. I can afford my repayments now, but if interest rates climb much higher, things could get tight.
Should I fix my rate for peace of mind, or stay variable in case rates drop? I’d love your thoughts.
Deidre.
Dear Deidre,
You’re not alone – this is a question so many homeowners are struggling with right now. There’s no magic answer because no one can predict exactly what interest rates will do, but there are a few ways to think through your decision.
Leading money educator Vanessa Stoykov
First, ask yourself: How much certainty do you need? A fixed rate means you’ll always know what your repayments are, which can be reassuring if you’re worried about rising rates. But if rates drop, you could end up paying more than you need to.
Variable rates, on the other hand, move with the market, meaning your repayments could go up or down. They also tend to come with more flexibility – like offset accounts and the ability to make extra repayments without penalty.
Since you already have an offset account, that’s a great tool if you decide to stay variable. Every dollar in there reduces the interest you pay, which could make a big difference over time.
If you’re leaning towards fixing, just check whether you’d still be able to make extra repayments or use your offset – some fixed loans are more restrictive.
Another option is a split loan – fixing part of your mortgage while keeping the rest variable. This can be a good middle ground, giving you some certainty while still allowing flexibility if rates change.
The big question, though, isn’t just fixed vs variable – it’s are you actually on the best loan for you? Many people roll over onto whatever rate their lender offers without realising they could get a better deal elsewhere. If you haven’t compared rates recently, now’s the time. You can use a mortgage tracker to see how your loan stacks up against what’s available.
But your mortgage is just one piece of the puzzle. Your decision should fit within your bigger financial picture – how it impacts your super, savings, and future goals. A financial planner can help make sure you’re thinking long-term, not just about your next repayment.
If you’d like expert guidance, I offer a free referral service Australia-wide to connect you with trusted financial planners and insurance specialists who can help you put the right strategy in place.
Whatever you decide, the most important thing is that your mortgage works for you, not the other way around. A little research now could save you a lot of money in the long run.
Best of luck,
Vanessa.
