Fixed vs Floating The 3 Key Questions To Ask Yourself
There's a lot of speculation as to when home loan interest rates are likely to rise significantly in New Zealand.
With what's been going on in NZ & globally over recent times, it can be hard as borrowers to decide when's the optimum time to lock in a fixed rate & for how long, or if you're better off to remain on a floating rate.
When it comes to home loan interest rates, it can get a little overwhelming considering the pros & cons of all the options available, and deciding what's best for you & your family.
However, when working with your mortgage broker much of that stress can be eliminated, as they can cut through the noise, use their years of experience (70+ years within the Focus Team) & will advise you based on your responses to these 3 key questions.
- Do you intend on moving? If yes, what's the likely timeframe for this?
- What are your future plans? - Maybe you're considering changing jobs, starting a family, retiring, undertaking major renovations. All these things can play a part in finding the best loan structure for you.
- What's your risk appetite? Are you someone who prefers the stability of knowing your payments will not change for the next 1,2 or 3+ years? Or do you prefer more flexibility & being able to increase your payments or making lump sum payments from time to time?
Deciding to lock in a fixed rate truly can be as simple as being able to answer these questions. Then depending on your responses your mortgage broker will come up with the best options available to you for your unique circumstances, saving you hours of research & consideration.
Final tip; When fixing an interest rate the most important thing to remember is it's about making sure you end up with an overall loan structure that supports your current & future plans, rather than solely chasing the lowest possible rate.