What would you do with an extra $32,000?

March 12, 2015
Chris Chivers

How do you make the most out of the interest rate cuts?

The last lot of interest rate cuts put about $65 per month back into our wallets (based on a typical variable home loan of $400,000) - that’s got to make you feel good.

What could you do with an extra $65? Take the kids to Macca’s each month? Go to the football? Buy a nice bottle of wine or take your partner to the movies (Gold Class!!)?

What if you put the $65 dollars back into your home loan?

If you put that little bit extra back into your loan it may save you $32,359 less in repayments (over a 30 year loan) – that’s extra money to be spent on you and your family


Refinancing - Is it right for you?


We all know that refinancing your home loan from one lender to another is a way to lower your regular repayments and ultimately your overall interest bill.


And it’s a great a way to get those home renovations done sooner rather than later, or pay for your children’s university fees, or any big ticket items like a holiday


Sound good? Absolutely. As long as you are doing it for the right reasons.


Do you know what your interest rate is on your current loan? What fees do you pay? Think about how you operate your existing loan and how you do your banking.  Understanding this might give you tips on what features you need in another home loan product, or which interest rate really is better, or if you actually benefit financially once you factor in all the fees.


Maybe staying where you are and putting a little extra into your loan each month is the better option for you


Should I fix my loan?


I get asked this a lot. What’s better? Fixed or Variable? Interest rates for both these loan products are very hot at the moment


Is cheapest always the best? They might be amazing at the moment but ask yourself why?


Statistics show that 78.32% of loans written in NSW/ACT were variable interest rate loans, and that number is rising. This may indicate that people are waiting to see what happens next - especially as economists are talking about another possible rate cut this year.  


It’s a great idea to fix rates to give you certainty around your monthly budget   


Or if you are an investor, fixed loans are not all that common, as you lose the flexibility over the loan, especially if you are planning to sell the property within a short timeframe,

Or even if you have a large amount of money parked in your offset, most lenders do not always provide a 100% offset on their fixed products, so,

 Yes or No? Basically it all comes down to your own personal situation


When will rates go up?


The million dollar question. I’ll get my crystal ball …


It’s obvious that the volatility around interest rates will continue. It’s amazing to think that it wasn’t that long ago (2014) that people were suggesting rates will rise.


While falling rates have impacted exchange rates (looks like we will be holidaying in our great land for a while), the jury is still out on the desired effect of boosting business & consumer confidence (which helps spending – which helps the economy to grow)


It has encouraged investors to get some possible positive gearing benefits, however the wider population is still influenced by housing affordability, especially in our home town Sydney, where rate cuts will serve to extend the hot property market further. Great news for property prices if you own a property.  


It’s also fairly obvious that the Reserve Bank of Australia (RBA) clearly sees some clouds gathering on the horizon of our economy so,


Most of this stuff is way out of our control, however, now is the time to ask yourself the question


Am I doing everything possible now to benefit from this market?


This where I can help, simply and quickly, by reassessing your personal situation and how your loan works for you.


I can research the market, and provide some options for the best loan for your situation.  Your best option could be just staying with your existing lender and keeping a watchful eye on the market, but, if it makes sense to move lenders, then I will work with you to move with as little disruption as possible.


As long as you are regularly doing something to keep up with the changing market.


Call me today on 02 8883 1606 to see if you can benefit from the low interest rates

Posted in: Tips

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