And how can it help me save?
In a rising interest rate environment, there tends to be very minimal or no break costs. Rate lock agreements are excellent and can save customers thousands of dollars in a short period of time. With a rate lock agreement, you are able to secure a new rate up to 60 days before the end of your current fixed term, but continue paying your existing rate for the next 60 days until your term runs out. Rate locking can potentially save you thousands when interest rates are on the rise, avoiding having to fix at a much higher rate in 60 days time.
Some banks only offer 35 days or fewer for these so it’s worth speaking to your financial advisor to discuss which rate lock option would suit you best, and making sure that you are working within your bank's policies.
For example, if you are on 2.29% and your mortgage is coming up for renewal in October, and it’s August where interest rates are consistently rising, the rates are very likely to be higher in October when you are up for renewal than they are now in August. It makes sense to rate lock in August so you have the security of getting the current lower rate, while only rolling off your existing 2.29% rate in October. Unfortunately not all banks offer 60 day rate locking so it’s best to speak to your Buddy financial advisor for advice to ensure that you get the best deal possible.
