July 18, 2017
You can't change your Home Loan every week?
These days, a week is a long time in Finance. It seems like every other day there is a change in policy, a change in rate, a legislative change, or some sort of economic activity that brings further amendments to bank's interest rates or the way they look at assessing home loans.
I have always said that buying a home loan based entirely on rate is not a viable decision, as sure as anything you will wake up one morning and find that it has changed and you are no longer on top of the pile. If you are wholly and solely focused on rate then you may care to consider an array of good fixed rates that are in the market at the moment, but sooner or later the rate will change and you may again be chasing your tail in the race for something better. This can become a costly exercise.
Instead I like to look at features and setups of loans so that they can mould with you in order to keep up with your lifestyle. I like to discuss the options of whether an offset is going to help, how will redraw work if you are considering starting a family. Perhaps things like excess payments or the option to split a loan down the track may be more in keeping with you if you are on a high income now that you may see could change in a couple of years as that part of your life comes to an end.
Banks don't normally work through this stuff so take the time to sit down with someone who can ask a few simple questions to see what types of things could align to your medium to long term scenario and THEN look at rates and how they might dovetail into making a more informed decision.
Pass this on by sharing with anyone you know who may be considering purchasing or refinancing soon so they can at least take steps to get it right so they can be more in 'set and forget' mode for a while rather than constantly being disturbed by being overtaken in the 'rate race'.