This month’s announcement by the 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 in our nature to all try to forecast where we think rates are going to go from here, it is difficult to get it right. Even the so called experts rarely get it right. The important thing is to take advantage of the market so you get the absolute best deal you can. There are lots of good deals out there so you should be asking yourself:
- How much are you paying now?
- How does your loan compare to the rest of the market?
- Does your home loan rate start with a 4?
There has never been a better time to review your loan, with such strong competition in the lending market.
Fixed rates are also very attractive, but you have to consider your situation as these loans restrict the amount extra you can pay off in the fixed period. You need to ask yourself whether you are likely to 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 are seeing 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 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. It may also help you secure a property for a good price if you are able to negotiate and settle quickly as the finance is already in place.
Commercial lending rates are also very competitive. We recently secured for a client refinance of $2.5m at a lending ratio of 50% and strong serviceability, a variable rate of 4.25% and fixed rates under 5%. Each transaction is priced on its merits, but now may be the time to compare the market for your loan.
Feel free to contact us if you want to check the rates you are currently paying are as low as you can get.
Article written by our Mortgage specialist – Domenic Corigliano of Mortgagelink.
*Correct as of May 2015
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to 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 contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.