This month’s recent announcement by the Reserve Bank of Australia (RBA) to cut interest rates to historically low levels has seen mixed reactions from Australia’s lenders, with some passing on the full rate cut, whilst others only some. While it is natural to all try to forecast where we think rates will go from here, it isn’t easy to get it right. Even the so-called experts rarely get it right. The important thing is to take advantage of the market to get the absolute best deal you can. With numerous favourable options available, it’s essential to consider the expertise of accountants in Sydney and ask yourself:
- Current Payment Evaluation: How much are you paying now?
- Market Comparison: How does your loan compare to the rest of the market?
- Interest Rate Benchmark: Does your home loan rate start with a 4?
With such intense competition in the lending market, there has never been a better time to do a comprehensive review with your loan.
While fixed rates are also desirable, but you must consider your situation as these loans restrict the extra amount you can pay off in the fixed period. You need to ask yourself whether you will sell the property in the short term. If so, there could be economic costs in breaking this, and consequently, it would be better to stick with a variable rate instead. We see many clients splitting part of their debt on a fixed rate to take advantage of the certainty whilst having the flexibility to make lump sum reductions on the variable rate loan.
Have you considered unlocking the equity in your house? A line of credit could be the ideal product for you. It will give you the flexibility to have finance available should an opportunity come up that you want to take straight away. This can also be an opportunity to help you secure a property for a reasonable price if you can negotiate and settle quickly, as the finance is already in place.
Even in the world of commercial lending, where things can be complex, rates can also be very competitive. For instance, we have recently secured a client refinance of $2.5 million at a lending ratio of 50% and strong serviceability, with a variable rate of 4.25% and fixed rates under 5%. Each transaction is priced on its merits, but now may be the right time to compare the market for your loan.
In this ever-changing financial landscape, relying on experienced accountants in Sydney is a wise choice. They can guide you through the complexities of the lending market, ensuring your decisions align with your current and future financial goals. As the effects of the RBA’s interest rate cut continue to ripple through the financial world, finding the right lending solution becomes more crucial. By utilising the opportunities at hand and tapping into their knowledge you’re setting yourself on a path to financial success.
Feel free to contact us if you want to check the rates you are currently paying are as low as possible.
The article was written by our Mortgage specialist – Domenic Corigliano of Mortgagelink.
*Correct as of May 2015
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.
