Fixed rate penalties
Most fixed rate mortgages penalise or limit early repayments during the fixed term; the same restrictions don’t usually apply to variable rate loans but check your loan agreement.
Check statements for errors
They can include calculation mistakes and incorrect timing of debits. One borrower was charged an incorrect fixed rate for 18 months — when she found out she got around $500 back from the lender.
Keep pace with rate hikes
If the Reserve Bank of Australia (RBA) increases interest rates, your lender is likely to follow soon after. Try to keep pace by increasing your regular repayments. If you think rates will rise but want your repayments to stay the same, consider locking into a fixed rate. It might be higher, but you’ll know what your repayments will be for the fixed term regardless of RBA changes. ‘Split loans’ divide your repayments between fixed and variable rates.
Early payout fees
They sometimes apply to variable rate mortgages, especially in the early years. Check what your lender charges.
When rates decrease
Maintain repayments at their current level (or higher) as whatever you pay over the minimum amount reduces the principal owed reducing the interest paid too.
Check if extra fees apply, and remember withdrawing repayments you’ve made could put your loan back into the slow lane.