As an Australian Defence Force member, you understand the value of stability and planning ahead. When it comes to your home loan, switching from a variable interest rate to a fixed interest rate through refinancing can provide that same sense of security for your financial situation.
Understanding Variable vs Fixed Interest Rates
Variable interest rates fluctuate with market conditions and Reserve Bank decisions. While this means your repayments can decrease when rates fall, they can also increase unexpectedly, making budgeting challenging during deployments or postings.
Fixed interest rates remain unchanged during the fixed rate period, typically ranging from one to five years. This means your loan repayments stay consistent, allowing you to budget with confidence regardless of market movements.
Why Defence Members Choose to Refinance
Many current and former Australian Defence Force members refinance to switch from variable to fixed rates for several reasons:
• Predictable budgeting: Fixed repayments make financial planning easier, especially during deployments
• Protection from rate rises: Lock in current rates before potential increases
• Access to better loan options: New lenders may offer more favourable terms
• Consolidate debts: Combine multiple debts into one manageable repayment
• Release equity to buy the next property: Access funds for investment or upgrading
• Reduce loan repayments: Potentially secure a lower interest rate
The Refinancing Application Process
Refinancing from variable to fixed rates involves several steps, but Finance & Mortgage Brokers like Defence Loans can streamline the application process:
- Assessment of your current loan: Review your existing loan amount and terms
- Document preparation: Gather bank statements and income verification
- Market comparison: Access loan options from banks and lenders across Australia
- Application submission: Submit paperwork to your chosen lender
- Settlement: Complete the switch to your new fixed-rate loan
Special Considerations for Defence Members
As a Defence Force member, you may be eligible for special lender policies that civilian borrowers cannot access. These can include:
• Reduced deposit requirements
• Waived fees and charges
• Flexible income assessment for allowances
• Consideration of Defence housing benefits
Working with a broker who understands these unique benefits ensures you check eligibility for special lender policies that could save you thousands of dollars.
Timing Your Switch
If your current fixed rate period is ending and reverting to a variable rate, this presents an ideal opportunity to refinance. Rather than accepting your current lender's variable rate, you can explore accessing a lower interest rate with a new fixed-rate loan.
Similarly, if you're currently on a variable rate and concerned about potential rate increases, refinancing to a fixed rate can provide peace of mind.
Additional Benefits of Refinancing
Beyond switching rate types, refinancing can help you:
• Change your loan term: Extend or reduce your loan period to adjust repayments
• Release equity in your property: Access funds for renovations, investments, or other goals
• Consolidate multiple debts: Combine credit cards, personal loans, and other debts
• Remove or add borrowers: Adjust loan ownership following relationship changes
Making the Right Choice
Every Defence member's financial situation is unique. Factors to consider include:
• Your current interest rate compared to available refinance interest rates
• How long you plan to stay in your current property
• Your risk tolerance for rate fluctuations
• Any exit fees from your current lender
• The costs associated with refinancing
A qualified mortgage broker can help you weigh these factors and determine whether refinancing aligns with your financial goals.
Working with Defence Loans
Defence Loans specialises in understanding the unique circumstances of Australian Defence Force members. Our team knows which lenders offer the most favourable terms for Defence personnel and can access loan options from banks and lenders across Australia.
We handle the paperwork, liaise with lenders, and ensure your application progresses smoothly, even if you're deployed or posted interstate during the process.
Whether you're looking to switch from variable to fixed rates, reduce your repayments, or release equity for your next property purchase, we're here to help you achieve your financial objectives.
Call one of our team or book an appointment at a time that works for you.
