Fixed-Rate Cliff: 3 Ways Mortgage Brokers Can Support Their Clients

Fixed-Rate Cliff 3 Ways Mortgage Brokers Can Support Their Clients

Currently, clients need a good broker more than ever. With the rise in interest rates, cost of living pressures, and the fixed-rate cliff approaching, clients need us to help their cash flow as much as possible.

A common misconception among the public is that the cliff only refers to people coming off low fixed rates to high variable rates. However, there are other issues happening that can compound this for your clients.

Many clients with investment loans will also be rolling off Interest Only periods. Many clients and brokers tend to align fixed rate periods with Interest Only repayment periods.

The impact of this can be massive. Can you imagine rolling off a low fixed rate to a high variable rate Principle & Interest loan? Clients will be paying thousands of dollars more per month.

This is where you need to step in.

Vision Agg Strategy 1: Pricing Concession

This strategy is quick, easy and essential. The first thing you can do for a client who is in trouble is ask their existing bank for a better deal. 

  • This is quick.
  • This almost always gets a reduction for the client.
  • The client gets immediate saving on cashflow.

You can still look at Strategy 2 and 3, but doing this first will be a winner for your clients. It also reduces the likelihood of the existing bank retaining the client at discharge time. Please contact us if you would like this explained further.

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Vision Agg Strategy 2: Refinance

If you and your client feel that the existing bank did not go anywhere near far enough, then you can scour the whole market for the best possible deal. This could yield even more savings for your client.

Depending on the age and circumstances of the client, you can also consider a small extension of the client’s loan term. If you feel the client needs to go back to a 30 year loan term, there are compliance considerations for you. You would need to show clients the long-term impact.

In any case, refinancing (with potential extension of loan term) can mean even more savings for your clients.

Vision Agg Strategy 3: the Deep Dive

If successful, the Deep Dive is by far the best!

What is a Deep Dive?

It is rate review, refinance and more. You are looking at:

  • The interest rate,
  • Loan types – owner-occupied or investment,
  • P&I v Interest Only loans,
  • Fixed rate and Interest Only roll off dates,
  • Interest Only roll off dates,
  • Loan expiry/maturity dates, and
  • Loan to Value Ratios.

Why do a Deep Dive?

It could save your clients the most money. But you need:

  • An accurate picture of where they are now and where they are headed to soon, and
  • An understanding of their exact cashflow picture. This is essential.

Who for?

Portfolio Builder. These are your clients with:

  • Multiple properties,
  • Multiple loans, and
  • A variety of repayment types.

When do you do it?

  • The sooner you do the analysis, the sooner you will understand what position your client is in.
  • Right now, we are in an environment where the sooner the better.
  • Providing good outcomes can take time.

What you need for a Deep Dive?

You need tools and information, including:

  • Property addresses,
  • Recent loan statement on each split,
  • Account Information on each splits showing rate, repayment, maturity, etc. (Most banking portals have this information.), and
  • A dynamic Workbook to store this information and use as a tool with your clients. Contact us if you want us to show you. Contact us button.

Vision Aggregation can help you support your clients during the fixed-rate cliff.

With uncertainty and potential financial challenges, the fixed-rate (and Interest Only) cliff can be a daunting prospect for many of your homeowner clients. However, with your support, knowledge, and experience, you can help your clients navigate this period with confidence.

At Vision, we ensure that all our brokers leverage their expertise, empower their clients to make informed decisions and secure the most advantageous mortgage solutions beyond the fixed-rate cliff. We have broker tools and resources, accessible in our Broker Portal when you join us, to ensure we are helping your professional development grow. With regular training and webinars, as well as an industry leading mentor program, our brokers are equipped to succeed.

If you want to know how we, a leading aggregator, can provide you with the support you need to maximise yours, and your clients’ success, contact us today.

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