#MortgageRates #BreakingMortgage #LowerRates #FinancialAdvice
Hey everyone! 👋 So, we find ourselves in a bit of a dilemma with our mortgage. We’re currently locked into a 2-year fixed mortgage at 7.05%, but we’ve noticed that banks are starting to lower their rates. 📉
We’re considering breaking our 16-year mortgage to potentially move to a new bank with lower rates, but we’re not sure if it’s the right move. Here’s some context:
– We can pay the break fee ourselves or try to get cash back from a new bank to cover it.
– We are financially stable and regularly save.
– We have no immediate pressure to move.
What do you think? Is it worth breaking our mortgage for lower rates, or should we just stick with our current plan? Any sage advice or personal experiences would be greatly appreciated! 🏡💡#FinancialPlanning #SavingsGoals #Homeownership
Rather than breaking try and increase your repayments as much as possible and then refix later and split as others have said
Run the numbers and work out which option is best. I’ve broken my fixed term before and ended up a good few grand better off after paying break fees.
Do you have a mortgage broker? I had a similar discussion with mine, he did the calculations of the newer rate plus my break fee..turns out i will be worse off if i broke my term and refixed at the newer rate.
You’d have to pay pack any cashback. Realistically you are at best moving to a 6.5% rate for 18 months at best. Why put yourself through this ordeal?
Two comments.
You can break and re-fix with the same bank, you don’t have to change banks to break. Changing banks comes with costs, discharging and then lodging a new mortgage etc.
There are break fee estimators on interest.co.nz and other sites, those will give you an approx number without having to ask the bank so you can see whether it’s taking further. If it looks worthwhile contact the bank and get the real break fee.
Same question as a FHB myself with similar rates
In 18 months they are likely to be even lower than you can fix them at now so you’re potentially better waiting it out.
Once you do get a chance to refix I’d suggest splitting it across two rates. So a portion at 12 months and the rest at 18 months. Or 18 and 24 etc. then you won’t be locked in for the whole amount for two years again.
Hold up, what rates are you expecting to get first? That’s a huge piece of Intel to run numbers. And what’s your break fee. And loan…
The point of break fees is to make banks indifferent between you breaking or not, you should therefore be flat on either of these options.
Why?
The delta is just 1% or so extra for 18 months.
If the cutting continues, you should see multiple declines in 2025.
No. You can obsess over getting an idealised best deal. You also got the protection that for 2 years it wouldn’t go higher.
The best performance on your mortgage is to work at paying more so you shorten the term of paying it off. While a lower rate is nice it doesn’t really compare to finding ways to pay more than you have to