If your mortgage repayment has increased but the RBA hasn't changed the cash rate, it doesn't necessarily mean something has gone wrong.
Your repayment can change because your fixed or introductory period ended, your lender changed your variable rate, or your interest-only period came to an end. Your repayment can also be recalculated even when your interest rate hasn't changed.
The first thing to work out is whether your interest rate changed, your loan structure changed, or your repayment was recalculated.
Here are four common reasons why.
1. Your fixed-rate period ended
If you fixed your home loan one, two or three years ago, the fixed period will eventually end.
Unless you arrange another fixed term, your loan will generally move to a variable rate. If that rate is higher than the fixed rate you were previously paying, your required repayment can increase significantly.
The size of the increase will depend on your loan balance, interest rate and remaining loan term.
Check: Look at your original loan documents or recent correspondence for the fixed-rate expiry date and the rate that applies when the fixed period ends.
2. Your introductory rate expired
Some home loans offer a discounted or introductory rate for a set period. Once the discount expires, your loan can move to a higher rate.
This is different from a fixed-rate expiry. You can have a variable home loan with an introductory discount even if you have never fixed your rate.
Check: Look at your original loan offer for the length of the introductory or discounted-rate period and the rate that applies afterwards.
3. Your lender changed your variable rate
Your lender doesn't have to change your variable home loan rate only when the RBA changes the cash rate.
Lenders can change their variable rates independently of an RBA decision. They may also offer different rates to new and existing customers.
This means you could be paying a higher rate than the rate currently advertised for a similar home loan, even though there has been no recent RBA move.
Check: Compare the interest rate on your latest statement with your previous statement. Then compare your current rate with what your lender is advertising for new customers with a similar loan.
A difference doesn't automatically mean you'll qualify for the advertised rate. Your loan-to-value ratio, loan type, features and other eligibility criteria can affect the rate available to you.
But a meaningful gap can be a reason to ask your lender for a better rate or compare your options elsewhere.
4. Your interest-only period ended
If you were making interest-only repayments, your scheduled repayments were generally covering interest rather than reducing the principal.
When the interest-only period ends, the loan usually switches to principal-and-interest repayments. You then need to repay the principal as well as the interest over the remaining loan term.
That can result in a much higher required repayment even if your interest rate hasn't changed.
Check: Look at your loan documents for the interest-only period and its expiry date.
What should you do now?
Once you know why your repayment increased, decide whether the change needs action.
If your rate has gone up, ask your lender whether it can offer you a lower rate. If it can't, compare your options elsewhere and consider whether switching could be worthwhile.
If a fixed, introductory or interest-only period has ended, check that the new repayment is affordable and that the loan still suits your needs.
If your repayment changed without an obvious reason, ask your lender to explain the change.
The bigger point is that your mortgage can change between RBA decisions. A fixed rate or introductory discount can expire, an interest-only period can end, and your lender can change a variable rate independently of the RBA.
That makes ongoing monitoring more useful than checking your loan only when the RBA moves. Bheja's Health Check helps you keep track of your home loan over time, so you can spot changes and decide when it's worth taking action.
