Refinancing Expat Home Loans: A Guide For Expiring Fixed Rates In 2023
In 2020 and 2021, the onset of the COVID-19 pandemic saw the Reserve Bank of Australia (RBA) set interest rates at a record low, i.e. as low as 0.1%. It was one of the causes of an unusual rise in the popularity of fixed-rate home loans in Australia.
Many Australian borrowers, including Aussie expats, locked their rates for three years or less. Two-thirds of those borrowers will complete their fixed terms in 2023, according to Aussie and CoreLogic.
So, what will happen when your fixed term expires, and how will it impact you?
Is Your Fixed Rate Expat Mortgage in Australia Expiring?
Some of the interest rates secured on fixed rates during the onset of the pandemic were as low as 1.95% for three years or less. If you locked in your rates between April and December 2021, your fixed term might finish between April and December 2023.
When these fixed-rate mortgages expire, they will revert to the bank’s standard variable rate.
How Will This Affect Me as a Borrower Living Outside Australia?
Australian expats on variable rates may already be familiar with the increased interest rates in Australia. However, the sudden rise in interest rates may come as a shock for many Aussie expat homeowners who are still paying low-interest rates for their homes.
Fixed-rate expat borrowers will find themselves paying 3 to 4% more than they currently pay. Further, the higher interest rate may negatively impact unprepared borrowers.
Consider Refinancing Your Fixed Rates for Your Expat Home Loan
The current Australian homeownership landscape in 2023 looks at higher interest rates and rent costs. Such increased rates may be a lot for some borrowers to adjust financially.
Refinancing your expat home loan provides better control over your expiring rates by changing the current terms and interest rates of your expat home loan. You can also take this opportunity to look elsewhere for the most competitive rates in Australia.
Although refinancing may help avoid being in a pinch, it may be better to wait until your fixed rate has expired before refinancing. For instance, a lender may charge you break costs for refinancing before your fixed term ends.
We recommend that you consider every aspect of your home loan rather than solely focusing on interest rates, especially if you are an expat. A specialist expat mortgage broker can analyse your needs and recommend suitable solutions and lenders.
Speak with one of our expat mortgage brokers to help you consider the most suitable refinancing option from the right lenders.
Get a free Australian mortgage assessment today.
Frequently Asked Questions
When your fixed interest rate term ends, you will usually be moved to a higher variable rate. Refinancing lets you lock in a new competitive fixed rate and potentially lower your monthly repayments.
The process is similar to getting your initial home loan. Your broker will help you find better deals and submit paperwork. You may need to provide updated income proofs and transfer funds internationally.
Start looking at refinance options 3-6 months beforehand. This gives you time to compare rates and go through the process without being rushed before your term expires.
There can be financial penalties for breaking your fixed rate ahead of expiry. Your broker will help you time it right to avoid fees.
Generally refinancing alone does not impact your visa or residency. Consult your mortgage broker and immigration expert to be sure of any potential issues.