Should I break my fixed rate loan?
Breaking the fixed rate period for your loan may seem like an easy way to save money when circumstances change. However this can have big financial implications due to the ERA cost, so it’s worth discussing your options with a lending specialist first. The best option depends on your individual circumstances. Here are some things to consider:
Short term versus long term financial implications
If you are considering breaking your fixed interest rate period to switch to a lower interest rate, it’s important to weigh up the ERA cost against the benefit of lower repayments. You should also consider whether breaking your fixed interest rate period will give you interest savings in the long run.
Paying for the ERA
An ERA can be costly, so you need to consider how you’ll pay it. If you can’t pay the ERA cost immediately, you may be able to add the cost to your loan as an addition to the principal sum borrowed. ASB’s lending criteria will apply and a one-off processing fee may also apply if you want to borrow more money. This option should be considered carefully as you’ll be adding to the total amount outstanding under your loan which will increase the amount of interest you’ll pay. Such considerations may outweigh the immediate benefit of lower repayments.
Related Answers
-
There are advantages and disadvantages to all of these options and you need to consider your personal circumstances when deciding. ...
-
The best home loan strategy is one that takes into account your individual circumstances, like your cash flow. Does your ...
-
You have a number of options when the fixed rate period ends: You can do nothing, your loan will automatically ...
-
If you don't have an Account Manager, call us on 0800 100 600 (Mon-Fri 8am - 8pm, Sat 9am-5pm).
-
Good question. Our ASB Economist produces a report called the Home Loan Rate Report which provides a summary of interest ...
-
The length of your fixed term rate is part of your overall decision about whether to have a fixed, variable ...
-
View our current home loan interest rates and fees. Please keep in mind that all rates are subject to change ...
-
Yes. You can choose to break or switch your loan’s fixed interest rate at any time however you may be ...
-
This functionality is not currently available through FastNet Classic internet banking or the ASB Mobile Banking app. Please contact your ...
-
Your fixed interest rate and repayments stay the same. Once your home loan is advanced on a fixed interest rate, ...
