Rate Choice Decoded

Choosing between a fixed and a variable rate for your mortgage can significantly impact your financial planning. Let’s explore this through the case study of two of my clients, let’s call them, Sarah and James, a couple from Christchurch, who recently faced this decision.

Sarah and James opted for a longer (three-years) fixed-rate mortgage when they bought their first home. They preferred the stability of knowing exactly what their payments would be each month, which helped them budget without worrying about rising interest rates. This peace of mind was crucial as they planned to start a family soon.

However, there are potential downsides to fixed rates, as they discovered. When rates dropped significantly one year into their mortgage term, they couldn't benefit from these lower rates without refinancing, which would involve penalties and fees.

In contrast, a variable rate could have offered them lower payments during rate dips but would also pose a risk if rates rose sharply. For those who prefer flexibility and can handle potential rate increases, variable rates might be more appealing. Each option has its merits, and the right choice depends on your financial situation and risk tolerance.

Call, Text or E-Mail to discuss:

Julia@brokerintel.net

020 41560804