When the Reserve Bank of Australia (RBA) announced last week that interest rates were going to stay unchanged for now, there was a big sigh of relief by home owners, but also a bit of speculation on the future.
RBA analysts are all in agreement the only way is up for the interest rates, it is unknown when that will happen. As Queensland is recovering first from the disastrous floods and now a cyclone, analysts have revealed how the trickle down effects will impact inflation.
As a mortgage holder, it is important to understand how this may impact you and your financial health. At the moment there is a window of opportunity to find a better home loan while the rates are low. Putting this decision off could put you at high risk of getting additional interest tacked on to your mortgage.
In order to put these increases into perspective, take an average Australian mortgage of $300,000 and add 0.25% to the interest rate. By increasing the interest rate by such a small margin, it adds an additional $50 to the monthly payment, which is an additional $600 by the end of the year. Analysts are stating that the rates could increase over the next year by 1% which would put $200 on top of your mortgage. A great option to help prevent getting affected by rate increases is through a Loan Refinance with your current home loan.
A Loan Refinance provides you with a new home loan that pays out your current mortgage. Through this process you can add additional debt you may have (such as credit cards) into the new mortgage, this allows you to repay those often high interest debts back at a lower rate, ultimately saving you in the long run.
Loan Refinance is a popular method due to the following :
- You’re able to change lenders if you’re unhappy with your current mortgage provider
- You can often secure yourself a better interest rate
- You can structure your new home loan to better suit your changing mortgage requirements (i.e. switch from fixed to variable)
- A Loan Refinance can also allow you to pay your mortgage off sooner
- Altering the repayment structure on your home loan can assist in lowering your overall monthly repayments
- Refinance your home loan allows you to consolidate your high interest debt (such as credit cards and personal loans) into your new mortgage, which means you will repay less on the amounts currently owing on these debts
- A Loan Refinance allows you to unlock the built up equity in your home, for personal expenses such as a home renovation.
If you would like to speak with a Loan Refinance consultant today about how you can take advantage of the benefits and secure a low interest rate call 1300 137 778.
