When it comes to fixing your interest rate for either a new or existing home loan, you don’t have to wait until the draw down/settlement date or the rollover date – you are able to do this in advance. This is commonly known as “rate-locking”.
This can be a great option to lock in your interest rate before that crucial date so that you avoid any possible adverse interest rate movements. This also gives you a little extra certainty on your home loan repayments, which is helpful for personal budgeting.
Each bank has its own maximum number of days that you can rate-lock in advance. Most banks operate with a 60 maximum period, however there are one or two banks that have a shorter maximum period, as little as 30 days in some cases. It can also change depending on whether you are re-fixing an existing home loan or fixing in advance for a new upcoming home loan.
It may not always be in your best interest to rate lock in advance and there are some cases where you may be unable to do so, for example on new build properties when there’s no certainty on title/Code Of Compliance issue date which dictates when settlement will happen. Also, when we are in a downward moving interest rate environment, it could be worth waiting right up until the very last moment to give yourself the best chance of possible further interest rate drops.
As advisers, we are well across each banks re-fix periods so when we work together will keep you up to date with when you are able to fix your interest rates under each scenario, and if it’s sensible to do so.