Refixing: fixed, floating, or a split?

Every couple of years, usually without much warning, your fixed rate rolls off and you have to decide again. Most people take whatever the bank's default offer is. A little thought at that moment is worth more than most people expect. Fixed rates buy certainty. Your repayment stays the same for the fixed term, which makes budgeting straightforward and protects you if rates rise. The trade-off is inflexibility. If you sell, refinance or want to repay a large lump sum during the fixed term, you may face a break fee. Those fees are calculated from the difference between your rate and current wholesale rates, and they can be substantial when rates have fallen. Floating rates buy flexibility. You can make extra repayments, pay the loan down faster and restructure without penalty. In exchange, your repayment can move whenever the lender changes its rate. Some borrowers use a revolving credit for exactly this reason: park savings against the loan and reduce the interest calculated each day. A split loan does not have to be complicated, and it is often the sensible middle. Fixing most of the loan gives budget certainty, while leaving a portion floating or revolving gives you somewhere to put savings and a way to pay down debt faster. Two things worth checking beyond the rate. First, any cash contribution the lender offers usually comes with conditions, and it may have to be repaid if you refinance within a set period. Second, the same headline rate can carry different fees, so compare the total cost over the fixed term rather than the advertised number. Refixing is also a natural moment to look at whether your structure still suits you: your loan is bigger or smaller than it was, your plans may have changed, and your bank is not automatically offering its best pricing. We review these at no cost to you.