Is It the Right Time To Exit Your Fixed-Rate Mortgage?

Mortgages icon5 min read

Entering into a fixed-rate mortgage can bring stability and peace of mind when you need it the most. However, when interest rates become too high, you might find yourself wondering if there are other options available to you.  

If this is you, and you’re unsure whether it’s possible to come out of a fixed-rate mortgage and explore better options, keep reading. In this blog post, we’ll talk you through navigating a high-interest rate environment and making informed decisions when considering exiting a fixed-rate mortgage. 

Assess the Current Market 

Don’t rush into making any changes to your mortgage, take the time to assess the current market conditions before making a decision. You should study the market to see if rates are truly high and here to stay or if they are likely to decrease in the near future. By keeping an eye on market trends, you’ll be in a better position to make informed decisions about whether exiting your fixed-rate mortgage is financially beneficial. 


Keep in Mind the Remaining Term 

Don’t forget to consider how much time you have left on your fixed-rate mortgage term. If you leave a fixed-rate mortgage before the term ends, you may incur penalties or fees which can impact your overall savings. If you’re nearing the end of your term, it might be better to wait until it expires to explore other mortgage options, as this will allow you to avoid any early termination charges. 


Calculate your Potential Savings 

Work out how much you can save by comparing your current fixed-rate mortgage with the prevailing interest rates in the market. You can potentially save yourself a good chunk of money by switching to a new mortgage with lower interest rates. But make sure to factor in any extra costs associated with refinancing, such as appraisal fees or legal expenses, so you don’t get caught out! Finally, consider the breakeven point—how long will it take to recover the costs of refinancing through the savings on lower interest rates? 


Talk to the Experts 

You don’t have to navigate the market by yourself – seek guidance from a mortgage expert or financial adviser. They’re able to provide you with independent advice specific to your situation, evaluate the financial impact of refinancing, and guide you through the process step-by-step. Their expertise will ensure you make the best decisions to achieve your long-term financial goals. 


Explore Other Mortgage Options 

Have you thought about alternative mortgage options that may be available to you? For example, adjustable-rate mortgages (ARMs) that come with interest rates that may fluctuate over time. If you do consider an ARM, be cautious as they carry potential risks if rates increase significantly in the future. Make sure to evaluate the advantages and disadvantages of different mortgage types to determine the best fit for your financial circumstances. 


Consider Refinancing 

If you decide to exit your fixed-rate mortgage, refinancing could be a viable option. Refinancing allows you to secure a new mortgage with improved terms and potentially lower interest rates. Before making a decision, carefully evaluate the associated costs and terms of the new mortgage. Scan the market and compare offers from multiple lenders to ensure you’re getting the most competitive deal. 


Prepare Financially 

Before making any changes to your mortgage, make sure your financial situation is stable enough to handle any changes in monthly payments or costs associated with refinancing. You don’t want to end in a worse position than when you started. Carefully go over your budget and consider potential future interest rate fluctuations and their impact on your financial well-being. 

Exiting a fixed-rate mortgage when interest rates are high requires careful consideration and evaluation of various factors. Our top three tips include: 

  • Assess the current market conditions 
  • Evaluate your remaining mortgage term 
  • Calculate your potential savings and costs associated with refinancing.  

Always seek advice from mortgage experts to make well-informed decisions. Remember, your long-term financial goals and overall stability should guide your choices. 


This content is for informational purposes only and does not constitute legal, financial or professional advice. The information provided is of a general nature and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances and is not intended to be relied upon by you in making (or refraining from making) any specific decisions. 


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