Monday 12th September 2016
The total amount of interest paid on debt in Australia has been as high as 12 per cent of disposable income in the past. This statistic is shocking when you consider that it doesn’t include any repayments on the principal of the loan at all.
To avoid paying too much, it’s essential to keep a close eye on your home loan, living situation and the market, so that you’re always getting the best out of your mortgage. With this in mind, here are just three signs that it’s time to refinance.
The cash rate is sitting at a fairly low level and most major banks have passed on savings to consumers, bringing their home loan rates to record lows.
It’s the perfect time to have a close look at your loan’s interest rates, as you could be paying as much as 2 per cent higher interest than the current market rate. This could mean savings of hundreds or even thousands a month if you refinance and lock in lower rates.
If you plan on moving in and out within a year or two, it may not be worth the cost and trouble to refinance your home loan. However if you’re in for the long haul, contacting us and refinancing could save you serious money.
In fact, the longer you stay, the more you’ll save if you lock in a lower interest rate. If you buy around the average price in Australia and are paying off an 80 per cent loan, savings from a 1 per cent drop in interest could be as much as $4,000 a year.
The reserve bank recently cut the cash rate to an all-time low of 1.5 per cent.
Planning your life can be a struggle. You have to spend time with friends and family, eat three times a day and sometimes even go to work and resemble a functioning adult. On top of all that there are mortgage repayments to worry about.
To make life just a little easier, it could be worth switching from a variable rate to a fixed rate loan. This will mean that your repayments are always the same amount, making it easier to plan your finances and focus on all the other little things you have to organise.