by Happy Homeowner
Regarding this mortgage rate and refinancing advice
Note from Kate: I enjoyed this refinancing advice from a Reader but I need a little clarification with terms. Can anyone help? Read what our refinancing homeowner advises and see if you can help me.
Kate, we locked in a mortgage for a fixed term - not the life of the mortgage. The rate at the time was reasonable compared to prevailing variable rates.
As benchmark interest rates have declined, initially at a medium pace and then rapidly in relation to the global financial crisis, the fixed rate vs variable rate difference has increased.
Instead of negotiating a fixed to variable transfer in the middle of the fixed term (which would have been quite expensive), we've been happy to re-lock at a lower rate owing to the decline in underlying rates and the natural cycle of our fixed term.
All in all, waiting another 3-4 months for this to happen was cheaper than breaking. Then again, having the opportunity to relock at approximately 5% below where our initial locked rate was is certainly a good option - especially given then underlying interest rates are likely to remain so low.


30 Year Fixed | 15 Year Fixed | 20 Year Fixed | 25 Year Fixed
40 Year Fixed | Hybrid | Interest Only
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