An interest rate environment where home loan rates are rising or falling is a prime time to evaluate your existing mortgage. It may well be that your existing mortgage is still adequate for your needs but in many cases changed circumstances may mean that you would be better off switching to a more suitable loan. Now is the time to make a decision before rates change again and problems start to occur.

Falling interest rates are not a problem if you have a variable rate loan. If, however, you have a fixed loan then you will obviously be paying more in interest than is necessary and you will have to pay a penalty to change from fixed to variable. Some lenders offer incentives to get their competitors customers to move over to them. Your best bet is to contact your broker and ask if there are any special deals that you can take advantage of.

Rising interest rates become a problem if you have a variable loan, and particularly so if you are on a fixed income. It is very difficult to predict the level of future interest rate rises. If you have any doubts about your ability to make repayments should rates move higher then you need to take immediate action. It is better to be safe and secure and paying too much if rates drop than being forced to sell in a falling market when you can't meet your commitments.

The preferred method of protection for most borrowers when rates are rising is the fixed interest mortgage loan. With this type of loan your interest rate and repayment is fixed for a set period, usually 1 to 5 years. At the end of this period it may change to a variable loan or you may be able to roll it over into a new fixed loan at the then current rate.

If you are thinking about refinancing, or need help and advice about whether to change your loan, discuss your options with a mortgage broker. Unlike banks who only promote their own products, a mortgage broker has access to lots of different loans and lenders and should be able to locate the best product for your needs, and there is no charge to you for their service. The lender pays.